Bitcoin (BTC) Price Forecast: Can $40k Support Hold This Week?

Key Insight:

• Bitcoin (BTC) price is trading above $41,000 in the early trading hours of Monday Jan 22, as bulls looks avert a reversal below the $40,000 support.
• Over the weekend, Bitcoin miners cut their reserves to 1.83 million the lowest in 3-years.
• After enduring multiple days of bearish headwinds, on-chain data shows that the $40,000 support has weakened. 

Bitcoin (BTC) price bounced between the $40,000 and $42,000 over the last 3 days. Amid looming risk of margin calls and amplified losses that could arise from losing the $40,000 support, the bulls swung in to cover their positions.

But as market demand remains weak, do the bulls have enough in the tank to hold the $40,000 support this week?

Bitcoin Miners Cut Reserves to Lowest Since 2021

Since the spot Bitcoin approval verdict on Jan 11, Bitcoin price has struggled to maintain a steady upward momentum.

Although, this has been majorly attributed to speculative traders ‘selling-the-news’ to book profits. However, a closer look at the underlying Bitcoin on-chain data trends now shows that the miners have also contributed substantially the current BTC price slump.

Cryptoquant’s BTC exchange reserves data captures real-time BTC balances deposited in wallets controlled by recognized Bitcoin mining companies and mining pools. 

Currently, it shows that Bitcoin have been on a historic selling frenzy behind the scenes.

As of January 16, Bitcoin miners held a total of 1.84 BTC million in their cumulative reserves. But that figure had rapidly dwindled to 1.83 BTC just a week later, on Jan 22, hitting its lowest values since August 2021.   

In essence, the miners have offloaded about 10,000 BTC from their wallets in the past week, between Jan. 16 and Jan 22.

With BTC currently trading at $41,000, the 10,000 coins offloaded over the past week are worth approximately $4.1 billion. If the overall market demand remains weak, this intense sell pressure from the miners could inadvertently send BTC price spiraling below $40,000. 

Also Bitcoin miners are highly influential to the global crypto markets. Currently, they control 9.3% of the  total Bitcoin circulation supply of 19.6 million. Hence, a prolonged selling frenzy among the miners could influence other stakeholders into taking bearish positions as well. 

Forecast: Will Bitcoin Price Drop Below $40,000 or Breakout Above $45,000? 

Amid heightened volatility and weakened market demand, BTC price now appears more likely to break above to dip below $40,000. Recent on-chain movements observed among Bitcoin miners further affirms this stance. 

However, for the bears to capitalize on the negative market dynamics, they have to scale the initial buy-wall around the $40,700 mark. 

 But, after nearly a week of bearish headwinds, the $40,000 support area now appears weaker than surrounding accumulation zones as depicted by IntoTheBlock’s In/Out of the Money around price data below.

1.6 million addresses had acquired 689,050 BTC at the average price of $40,739. The chart below shows this support level is significantly weaker than the initial resistance cluster of 2.7 million investors who bought 1.07 million BTC around the $42,617 zone 

If the $40,000 support caves in as predicted, BTC price could tumble toward $38,000 before finding a more significant short-term support. 

Alternatively, the bulls could invalidate this bearish forecast if Bitcoin price can break above $45,000. However, in that case, the 2.7 million holding addresses that acquired 1.07 million BTC at the maximum price of $42,617 could pose major resistance.