Bitcoin falls below $39,000 support, analysts say "limited on-chain demand, slowing seller pressure"

Bitcoin turned down again after sideways trading over the weekend due to increased selling pressure. Bitpush terminal data showed that Bitcoin fell below the $39,000 support and was trading at around $38,300 at press time, down 1.14% in 24 hours. Analysts believe that Bitcoin has reached a "delicate balance" with limited on-chain demand and slowing seller pressure, and new stimulus factors are needed to see further upward or downward trends.

From a macro perspective, the United States and its European allies are considering a ban on oil imports from Russia, and rising oil prices could lead to slower economic growth and lower stock prices. In the crypto market, on-chain transaction volumes remain low as uncertainty persists, and analysts note that selling pressure has not dissipated. This situation has lasted for more than two months, and short-term investors have exited the market, which may indicate limited room for price increases.

Glassnode analysts said this normalcy could break at any time if bulls continue to lose momentum or bears reach exhaustion: "With prices moving sideways in recent weeks, a relative balance has been established. However, given limited new demand, this delicate balance could be disrupted by any significant short exhaustion or reactivation."

On the other hand, the Glassnode report found that short-term speculators have an unrealized loss of 15% (the metric reflects all tokens moved in the past 155 days), but this is significantly lower relative to the overall market size. Most of these investors bought in at around $46,400, and are currently losing money compared to the average purchase price of long-term holders at $39,200. Glassnode added: "We can see that daily losses have continued for more than two months, equivalent to about 0.5% of market value per day. Losses of this size, while significant, are far from the extreme sell-off levels seen in the 2018 bear market, March 2020, or May 2021."

"Crypto markets need to see a period of stability over the next two to three months before a more sustainable recovery can begin," David Duong, head of institutional research at Coinbase (COIN), wrote in a report. Duong said the next big move for cryptocurrencies may be determined once investors gain greater clarity on central bank policy and geopolitical events.

Offering a more optimistic view on the current weakness, analyst Michaël van de Poppe published the following chart outlining a potential fall back to the low-$36,000 range for BTC price.

“Bitcoin is still correcting after the $39,200 rejection and we’ll see some more liquidity pick up around the low $36,000 levels before it has a chance to gain some upside momentum,” he said.

The overall cryptocurrency market cap currently stands at $1.7 trillion, with Bitcoin’s dominance at 42.3%.