Bitcoin price battle for $40K continues — Here’s what BTC bulls must do

Bitcoin price wavers at $40,000, but on-chain and technical data hint at early signs of a recovery.

Bitcoin (BTC) price has fallen 20% since the launch of spot Bitcoin ETFs in the United States. BTC dropped to $38,000 on Jan. 23. However, Bitcoin whales have used the recent pullback to buy on the dip as bulls aim to reclaim $40,000.

Data from Cointelegraph Markets Pro and TradingView showed a BTC price rise to $40,000 on Jan. 25, but intraday price action suggests holding the level will remain a challenge.

Let’s take a look at the factors that have traders feeling optimistic about a Bitcoin price recovery above $40,000.

Slowing GBTC selling backs fresh bullish sentiment

Since Bitcoin ETFs turned into a “sell-the-news” event, traders have lacked the momentum to beat the overhead pressure. This has been blamed on large outflows from the Grayscale Bitcoin Trust (GBTC), which is possibly a reflection of investors choosing to move into the Bitcoin ETFs with lower fees.

Notably, there has been a decline in the outflow of funds from GBTC for two consecutive days, signallingsignaling reduced selling pressure from long-trapped investors who couldn’t redeem their GBTC shareholding earlier.

Bloomberg senior ETF analyst Eric Balchunas noted that while GBTC outflows are showing a downward trend, outflows from the other ETFs slowed down with the net flows remaining substantial at $824 million.

The good news: GBTC outflows trending down. The bad news: so are the Nine’s. That leaves us with TOTAL ROLLING NET FLOWS of +$824m. Also $ARKB and $BITB crossing half a billion is remarkable. For any normal launch in first month that’s considered blockbuster-level success. https://t.co/jPtlxhMtwP

— Eric Balchunas (@EricBalchunas) January 25, 2024

As such, with GBTC outflows decreasing day by day, BTC may rise higher from the current levels.

On-chain data shows Bitcoin whales buying dips

Amid the ongoing market correction, data from blockchain data and intelligence firm Glassnode shows an interesting activity among Bitcoin whales. These large investors are actively accumulating more BTC despite the recent market volatility.

The data highlights entities holding 1,000 BTC or more, which increased from 1,481 entities on Jan. 11 when spot BTC ETFs began trading to 1,533 on Jan. 25, representing a 3% increase.

This accumulation behavior from Bitcoin whales could be a signal that large entities continue to expect BTC price to surpass its 2024 high at $49,000.

Related: Bitcoin sees biggest bid block in 3 years as BTC price slips at $40K

$40,000 remains a critical level for Bitcoin

From a technical point of view, Bitcoin’s relative strength index (RSI) is turning up away from the oversold region. This suggests that the recent pullback could be coming to an end.

Buyers are expected to aggressively defend the $40,000 support, but they will have to kick the price above the 50-day EMA to signal a comeback. The bullish momentum may pick up after the BTC/USD pair jumps above $44,700.