Opinion: Despite record miner sell-off, BTC could revisit $40,000 in February

Bitcoin has experienced a lot of volatility over the past week. Prior to the weekend, Tesla founder Elon Musk changed his Twitter profile to "Bitcoin", which led to a huge and instantaneous rise in the price of Bitcoin, bringing it close to the $40,000 level. However, there has been resistance, so there was a sharp drop to $33,000 before Bitcoin set another all-time high. Several indicators hinted at a sell-off before the Bitcoin price rally was boosted, and they have held true so far. Bitcoin outflows from miners hit a record high, and all transactions transferred by miners to exchanges hit a yearly high.

Bitcoin miners’ outflows || Source: Twitter

When the price of Bitcoin began to rise again, the increase in demand may have directly led to the increase in market capitalization. Despite the increase in Bitcoin outflows from miners, the price of Bitcoin remained range-bound. The rebound was followed by a sell-off, and the price on spot exchanges continued to fall. According to CoinMarketCap, as selling pressure increased, trading volume has decreased by about 50% from early Thursday. So, does the market capitalization mean a trend reversal or a continued rebound?

Source: Twitter

Depending on the volatility of the network and Bitcoin’s momentum, the Woobull chart suggests that Bitcoin’s price could continue to rise after closing January below $35,000 despite outflows and increased selling pressure. The drop in demand is temporary as always, however, as we get closer to the 21 million Bitcoin total, the new supply of Bitcoin is falling. This could be a key driver of range-bound prices and cyclical movements during the same market cycle. In the long run, stocks like GameStop on Wall Street may ultimately have zero impact on investment flows into Bitcoin.

Furthermore, the accumulation of whales at different price levels above $30,000 provides support above this price range. There are other factors such as the explosive interest and investment flow in DeFi and a possible altcoin rally, with Ethereum leading the way. However, since Bitcoin’s market cap dominance is 62%, it is possible that the S2F model will be followed and there will be another price rally, which could take the price above $40,000 in February 2021.