Here’s Why The Bitcoin, Ethereum, And Solana Prices Are Still Crashing Hard

Overview

Recent insights from crypto researcher Axel highlight the ongoing decline in the prices of Bitcoin, Ethereum, and Solana. This downturn is primarily attributed to a supply overhang in the market, which poses significant challenges for recovery.

Current Market Situation

Axel’s research indicates that Bitcoin (BTC) is experiencing notable selling pressure, particularly after breaking below the $90,000 threshold. This breakdown was accompanied by anomalous exchange inflows, suggesting that sellers were strategically preparing for this movement. The report emphasizes that the 1.0 level of the short-term holders’ Spent Output Profit Ratio (SOPR) is now acting as a resistance level, which could further hinder price recovery for Bitcoin, Ethereum, and Solana.

The analysis also points to a significant influx of Bitcoin into exchanges. Between January 20 and 21, approximately 17,000 BTC were noted to have flowed into exchanges, coinciding with BTC’s drop to a low of $87,000. This influx occurred against a backdrop of predominantly negative netflows earlier in the month, indicating a shift in market dynamics. Axel interprets this spike in inflows as a sign of supply preparation rather than neutral transfers, reinforcing the notion that the recent price decline is structural rather than driven by emotional reactions from investors.

As of the latest observations, Bitcoin’s netflow has returned to neutral levels, but the accumulated inflow continues to create a supply overhang. This could potentially lead to further declines in the prices of Bitcoin, Ethereum, and Solana. Axel suggests that a positive signal for recovery would be a negative netflow occurring alongside rising prices, indicating that the supply overhang might be alleviating. However, the current situation indicates increased selling pressure, particularly from short-term holders looking to sell at breakeven.

From author

The analysis provided by Axel offers a clear picture of the current challenges facing the cryptocurrency market. The persistent supply overhang and the behavior of short-term holders indicate that recovery may be difficult in the near term. Understanding these dynamics is crucial for investors looking to navigate this turbulent environment.

Impact on the crypto market

• Bitcoin, Ethereum, and Solana are currently facing significant downward pressure due to a supply overhang.
• Anomalous exchange inflows suggest strategic selling rather than panic-driven market movements.
• The short-term holders’ SOPR acting as resistance indicates challenges in achieving price recovery.
• The recent spike in BTC inflows into exchanges coincided with a notable price drop, highlighting potential market vulnerabilities.
• A negative netflow amid rising prices could signal a shift in market sentiment, but current conditions suggest ongoing selling pressure.