Key Points
- Bitcoin’s network activity has significantly declined, potentially exerting downward pressure on its price.
- Increased Bitcoin reserves on exchanges may also hinder the cryptocurrency’s ability to rally.
Bitcoin’s [BTC] trading range has been relatively stable, fluctuating between $93,000 and $94,000. This shows the market’s uncertainty about its next direction.
In the last 24 hours, the price of Bitcoin has seen a minor drop of 0.75%. However, the trading volume has increased by 68.66% to $29.41 billion, indicating possible intensification of selling pressure.
Declining Network Activity and Its Impact
Over the past month, the number of active addresses on the Bitcoin network has significantly decreased, currently standing at 667,100. This is the lowest level since November 2024.
This decline suggests a decrease in interaction and transaction activity on the Bitcoin network, potentially indicating a drop in interest. However, it also implies that the remaining active addresses may control a significant portion of the Bitcoin supply. If these addresses increase their buying activity, it could potentially trigger a price rally.
Challenges to a Potential Rally
According to data from IntoTheBlock, if these active addresses increase their buying activity, Bitcoin could encounter a significant supply zone, leading to selling pressure. Approximately 1.46 million addresses hold potential sell orders for a total of 1.29 million Bitcoin between $95,900 and $98,600.
If Bitcoin manages to cross this supply zone, it could potentially reclaim the $100,000 region. However, failure to do so could see Bitcoin drop below $90,000, indicating further downside risk.
CryptoQuant data shows that Bitcoin reserves on exchanges have been gradually increasing. Since January 8, Bitcoin reserves have grown from approximately 2,354,000 to 2,360,000. This increase in exchange reserves could potentially exert additional downward pressure on Bitcoin’s current price level and hinder its ability to rally.