Yesterday, Bitcoin fell below $40,000, calming the spirits of crypto-investors after the market was flooded with excitement following the approval of the first spot ETFs in the US: here are the latest BTC price analyses.
Bitcoin falls below $40,000: the latest price analysis
Yesterday at 20:00 Italian time, Bitcoin knocked on the door of $40,000, bringing its price below the fatal level, while the latest analysis indicates a fertile ground for a bearish follow-up.
Yesterday, BTC lost a total of 4.84%, falling from 41,500 USD to 39,500 USD, with a trading volume of more than 29 billion dollars in spot trading.
The violent session of strong selling hit Bitcoin and the entire cryptocurrency market, it started at midnight on Monday, January 22 when the orange coin lost the 50 EMA on a 1-hour time frame and recorded a downtrend acceleration.
In fact, the origin of the dump dates back to Thursday, January 11, days when Bitcoin spot ETFs appeared on the stock exchanges in the United States, offering American investors a safe and regulated investment vehicle to trade the crypto asset .
On that occasion, the price of BTC initially reached a local high of 48,900 USD, only to decline and close the day at 46,700 USD.
The analysis of the next days trades clearly shows a predominantly bearish direction, with the majority of selling affecting outflows from the Greyscale Bitcoin Trust (GBTC).
Indeed, the cryptocurrency investment fund is the protagonist of the price rally at the beginning of the year, liquidating an average of 16,000 BTC per day, reducing its holdings from 619,000 BTC to 536,000 BTC.
In any case, contrary to what is being told by mainstream media, it is not Grayscale itself that is speculating on the cryptocurrency market by selling its assets, but it is the investors who previously opened positions through it that are proceeding with the liquidations.
The reasons in this regard may be partly related to a bearish bias that pushes them to press the “sell” button, and the desire to reduce the management costs of their ETF as Grayscale’s fees are extremely above the average of other fund managers .
Indeed, most of the sales of GBTC are only intended to change managers: all this does not change the outlook for Bitcoin ETFs, which see an increase in outflows compared to capital inflows.
Analysis of Crypto Market Prices and Sentiment
Trying to outline an analysis of the price of Bitcoin, which recently dropped below $40,000, we can easily observe a current state of weakness that favors bearish play.
After an extremely positive Q4 2023 for the entire cryptographic sector, with BTC growing by more than 50%, it is time to capitalize on all the accumulated enthusiasm.
The “Supertrend” indicator, after a whopping 115 days, returns to trace a red trend in the Bitcoin chart, highlighting the beginning of a prolonged bearish phase.
Compared to November 2023, we see a strong bearish divergence between the price of the crypto and the “Relative Strength Index” (RSI), simultaneously approaching oversold territory on the daily timeframe.
Rather, the market volumes remain consistently high, without offering any specific clues about price action.
Although it is not easy to identify a support level for BTC right now, we can imagine that if the demand does not make itself felt soon, we can easily visit the $36,000 before the market king decides the next move.
In the event of a recovery, the threshold of 44,000 USD will be the dividing line between the hopes of the bulls who dream of seeing a new all-time high this year, and the claws of the bears who have tried to let the currency fall.
On the market sentiment front, it is clear how all the euphoria of recent weeks is slowly disappearing.
We haven’t reached a state of terror yet, but we could get there if the price of Bitcoin continues to drop relentlessly over the next few weeks.
By analyzing the data provided by Alternative.me’s “Fear and Greed Index,” we can see how neutrality reigns at this exact moment.
However, we remind you that this data refers to yesterday’s day, so actually the sentiment may be slightly more negative today.
Anyway, we note how last month the indicator showed a confidence and calmness value in the market of 71, while now we find ourselves at 50, at the mercy of the increasingly significant fluctuations of Bitcoin and other cryptocurrencies.
For the next few days, the analysis of BTC price and sentiment does not provide clear insights and does not provide information regarding a specific level to take positions, but it indicates with a high probability that two-way volatility will continue, at least until the end of January.
Liquidations and open interest on Bitcoin
Since the analysis of Bitcoin price is quite insufficient to provide accurate predictions, let’s focus on derivative markets and see what the indicators of open interest and liquidations suggest.
According to the data provided by Coinalyze, the open interest of Bitcoin, which is the sum of open derivative positions (short or long) on this crypto-asset at the moment, is at 10.3 billion USD.
In the previous 50 trading days, this indicator fluctuated between 11 billion USD and 12.5 billion USD, reaching the lowest level today.
This in itself is not a good sign: it indicates that interest in speculation is gradually waning, in a typical bear market scenario.
In any case, it is still too early to draw conclusions, as the open interest is much higher than the values recorded in September 2023 when Bitcoin was priced at $25,000.
Regarding the liquidation zones of leveraged traders, we can easily identify a price level that is decisive for the future price action of Bitcoin.
We are talking about the 42,000 USD, a key price zone where we notice the highest presence of potential liquidations for Bybit traders and also for other exchanges.
This means that if the price of Bitcoin were to rise above $42,000, we could see a short push that would send the crypto to a significantly higher level, probably around $45,000, before a new hypothetical rise.
In the coming days, it will be crucial to observe how the market king will react to the recent slippage and monitor the indicators of derivative markets to understand how the situation will develop.
In the meantime, keep an eye on leverage, as volatility is high and unpredictable right now.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
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