Crypto researcher Axel has shared his analysis on why Bitcoin, Ethereum, and Solana prices continue to fall. This comes as Bitcoin faces a supply overhang, which could push cryptocurrency prices even lower.
In a research report, Axel pointed out that unusual exchange inflows occurred as Bitcoin dropped below $90,000, indicating sellers had prepared in advance. The market remains at risk of further selling pressure because the short-term holders’ SOPR metric is now acting as resistance rather than support around the 1.0 level. This suggests Bitcoin, Ethereum, and Solana could see additional declines.
Axel also highlighted Bitcoin netflows into exchanges, noting that nearly 17,000 BTC moved into exchanges between January 20 and 21. This coincided with Bitcoin falling to around $87,000, while Ethereum and Solana also dropped. He explained that these unusually high inflows followed a period of mostly negative netflow earlier in the month.
Given the falling Bitcoin price, Axel believes this spike likely reflects sellers preparing to offload supply, rather than neutral transfers. In other words, the drop below $90,000 appears to be driven by market structure rather than sentiment. Although Bitcoin netflow returned to neutral levels recently, the accumulated inflow has created a supply overhang that could lead to further price drops for Bitcoin, Ethereum, and Solana.
Axel noted that an improvement would be signaled if netflow turns negative again while prices rise, suggesting the overhang has been absorbed. However, with the short-term holders’ 7-day SMA SOPR below 0.996, he indicated that Bitcoin faces selling pressure on every recovery as these holders look to break even. A reversal could be confirmed if the SOPR breaks above 1.0 from below and holds there for three to five days, filtering out false signals after the selloff.
Why a Break Above $100,000 Looks Unlikely for Now
In its latest report, on-chain analytics platform Glassnode explained that a Bitcoin rally above $100,000 appears unlikely for now due to the persistent supply overhang. They noted that this overhang above $98,000 remains the main selling force limiting short- to mid-term rebounds.
Referring to the Unspent Realized Price Distribution metric, Glassnode observed that the recent Bitcoin rally partially filled the previous gap between $93,000 and $98,000, driven by redistribution from large buyers to newer market participants.
However, the unresolved supply overhang is expected to cap attempts to break above the short-term holders’ cost basis of $98,400 and the $100,000 level. A strong and sustained increase in demand momentum would be needed for a clear breakout above $100,000 to occur.
Frequently Asked Questions
FAQs Why Are Bitcoin Ethereum and Solana Prices Falling Sharply
BeginnerLevel Questions
1 Why are crypto prices like Bitcoin dropping so much right now
Several factors are combining at once including high inflation and rising interest rates major selloffs by large holders and general fear and uncertainty in the global economy
2 Is this a normal thing for cryptocurrencies
Yes extreme volatility is a known characteristic of the crypto market Sharp price drops have happened many times before This is often called a crypto winter or a major correction
3 Should I sell my crypto because the price is falling
This is a personal financial decision Selling during a sharp drop often locks in losses Many longterm investors choose to hold through downturns but you should only invest money you can afford to lose
4 What does crypto winter mean
Its a term for a prolonged period of declining prices and low market sentiment in the cryptocurrency market which can last for months or even years
5 Will the price ever go back up
Historically after major corrections crypto markets have eventually recovered and reached new highs However past performance does not guarantee future results and recovery is never guaranteed
Intermediate Advanced Questions
6 What specific event triggered this latest sharp decline
There is rarely one single trigger Recent pressures include the collapse of the Terra ecosystem which shook confidence potential stricter regulations and the failure of several crypto lending companies forcing them to sell assets
7 How do rising interest rates affect Bitcoin and Ethereum
When central banks raise interest rates to fight inflation it becomes more expensive to borrow money Investors tend to pull money out of risky speculative assets and move it into safer interestbearing assets
8 What is leveraged liquidation and how is it making the drop worse
Many traders use borrowed money to amplify their bets When prices fall quickly exchanges automatically sell their positions to repay the loans creating a cascade of forced selling that drives prices down even faster
9 Are Ethereum and Solana falling for the same reasons as Bitcoin
Broadly yesthey are affected by the same macroeconomic