Bitcoins [BTC] the price “could reach $42,000 this year,” well only if…

• On-chain analysis revealed that BTC has the potential to rise to $42,000 before the end of the year.
• Meanwhile, coin distribution exceeds accumulation.

CryptoQuant analyst Oinonen_t is currently trading at its September 2022 level, opined that Bitcoin [BTC] “has a significant chance to reach his fair price of $42K this year.”

According to Oinonen_t, an assessment of two indicators on the chain, namely BTC’s exchange stablecoins ratio (ESR) and foreign exchange reserves confirmed the potential for a further price increase.

Is your portfolio green? Check out the Bitcoin Profit Calculator

The analyst noted that BTC’s ESR has surpassed a technical turning point and is deviating from the spot price, which is a positive sign.

In addition, BTC’s foreign exchange reserves have been in a long-term downward trend, reflecting entities holding their assets off-exchange, which the analyst referred to as a “healthy development” for the market.

These factors, along with the approaching halving event in 2024, indicate that BTC is moving towards a new pre-halving accumulation cycle, Oinonen_t concluded.

Source: CryptoQuant

Another CryptoQuant analyst operating under the pseudonym Yonsei_dent also shared a similar belief in a continued rise in BTC’s price, assessing BTC’s Supply in Profit calculation and finding that the current market has passed the Bottom Discovery phase and entered the transition phase, which often precedes a potential for a bull market.

He further found that BTC’s Adjusted Spent Output Profit Ratio (aSOPR) on a 400-day moving average has reached the previous cycle’s low, suggesting further decline is unlikely.

“Compared to the timing of entering the bull market in 2019, it appears that a bull transition is about to pass through the bottom. However, as for the 2015-2016 bottom, the supply in excess (%) decreased after the transition phase, and the bottom period became longer. Since aSOPR 400MA hit the previous cycle low, further decline is unlikely. However, there is a concern that the current situation will be prolonged unless it changes to a positive (+) rise,” Yonsei_dent noted, adding a warning .

Source: CryptoQuant

Read Bitcoins [BTC] Price prediction 2023-2024

Stay alert

According to data from CoinMarketCap, BTC’s price fell by almost 5% in the last week. At press time, the king coin changed hands at $21,885.

A daily chart assessment of price movements revealed a significant decline in BTC accumulation over the past week. At 1.74 million at the time of writing, the coin’s On-balance Volume (OBV) had fallen by 1% since February began.

A steady fall in the asset’s OBV indicates that there is reduced buying pressure and increased selling pressure, which suggests that market participants are becoming more bearish on the asset. This could mean potential downward price movement as there is less demand for the asset.

The position of BTC’s Chaikin Money Flow (CMF) confirmed where market sentiment rested. At minus -0.07 at press time, more investors took to distributing their BTC holdings rather than holding onto them. A continued downtrend in BTC’s CMF could be followed by a price downside. Therefore, caution is advised.

Source: BTC/USDT on TradingView