Cryptocurrency is still considered a risky asset class, which explains the reduced interest in times of macroeconomic trouble. Rising global inflation and the risks associated with the global energy and manufacturing crises are prompting market participants to reassess their positions. 

Consequently, late January saw whales (wallets with more than 1,000 BTC) increase their Bitcoin reserves, assuming a price of $40,000 and below optimum supply. Now, they have returned to active selling.

From the current price drop, minor buyers with wallets of up to 10 BTC are sustaining activity. They are ramping up their buying in the hope that a local bottom has already formed. However, analytical reports from Willy Woo suggest the lack of a sufficient dip in the relative cost basis. Woo states, "there is still room for another drop".

Acheron Insights editor Christopher Yates shares Woo's concerns and expects Bitcoin to fall to $30,000 on the worsening macroeconomic conditions and the Fed's policy of gradual monetary tightening.

However, the majority of market participants remain optimistic about the cryptocurrency market's future fortunes. For example, publicly-traded mining companies have announced that they are to increase their orders for new ASICs, aiming for more than a 200% increase in capacity by year-end. The biggest drive is expected to come from Marathon Digital, which is planning to raise its hash rate by 600% to become the most powerful publicly traded miner in the world.  

At the same time, mining firms are in no hurry to cash in their mined coins, with several of them not only mining but also purchasing Bitcoin on the market. As a consequence, Marathon Digital currently holds reserves of 8,956 BTC, with 4,813 BTC of those purchased by the company in January 2021.

Just today, the US Federal Reserve announced that it is raising its key rate, which could lead to a new wave of Bitcoin selling. At the very least, the whales will seek to retrieve their losses from this scenario, counting on a return to buying at lower prices.

StormGain analytical group 

(cryptocurrency trade, exchange and storage platform)