In a recent analysis, crypto researcher Axel has shed light on the ongoing downward trend in the prices of Bitcoin, Ethereum, and Solana. The declines are primarily attributed to a persistent supply overhang in the market, particularly relevant as Bitcoin continues to face immense selling pressure.
Axel pointed to recent data illustrating anomalous exchange inflows, which were observed just before Bitcoin dipped below the $90,000 threshold. This spike in inflows suggests that sellers were preparing in advance for the price drop, further exacerbating the overall bearish sentiment. The researcher highlighted that the short-term holders’ Spent Output Profit Ratio (SOPR) has shifted to act as a resistance level instead of support, raising concerns that cryptocurrency prices may fall further.
Between January 20 and 21, approximately 17,000 BTC were moved into exchanges, correlating with Bitcoin’s decline to about $87,000. This influx was particularly noteworthy as it came after a period marked by largely negative netflows at the start of the month. Axel emphasized that the sudden influx likely represents supply preparation rather than neutral market activity. The breakdown below $90,000 appears to be more structural than purely emotional; thus, the pressure on Bitcoin, Ethereum, and Solana remains significant.
Despite a recent return to neutral netflow levels for Bitcoin, the accumulated inflow is still raising concerns about a supply overhang, suggesting potential for further price declines. Axel noted that an improvement signal would be a negative netflow coinciding with rising prices, indicating that the supply overhang might be alleviating. Nonetheless, the current market conditions, characterized by short-term holders looking to break even, point to an increase in selling pressure during any recovery attempts.
Axel provided insight into potential market dynamics, stating that a reversal signal could be confirmed if the SOPR manages to break above the 1.0 level from below and remains stable for three to five consecutive days. This would help filter out false indications following a selloff.
Moreover, on-chain analytics platform Glassnode echoed Axel’s concerns, suggesting that a Bitcoin rally beyond $100,000 appears improbable in light of the enduring supply overhang. They observed that the dominant sell-side pressure is capping medium-term rebounds, with the supply located above $98,000 serving as a significant barrier.
Glassnode referenced the Unspent Realized Price Distribution metric, noting that while the recent Bitcoin rally partially filled a gap between $93,000 and $98,000—prompted by a shift of assets from top buyers to newer market participants—the unresolved supply overhang could continue to impede any breakout attempts above critical levels.
For Bitcoin to achieve a substantial and sustained rally above $100,000, a significant acceleration in demand momentum will be necessary. As market conditions evolve, traders and investors will be closely monitoring these metrics to gauge potential price movements in the coming weeks.
