Analysts warn that Bitcoin could dip to $38K ‘before an eventual breakout’ – Cointelegraph

The cryptocurrency market faced another day of weakness on Jan. 18 as the price of Bitcoin (BTC) dropped lower and additional pressure was also put on the altcoin market. Currently, the crypto Fear and Greed Index registered "Extreme Fear" among investors and some traders caution that BTC price could soon fall below its recent $39,000 swing low.

Data from Cointelegraph Markets Pro and TradingView shows that bulls lost control of the $42,000 support level during the early trading hours on Jan. 18 as bears hammered the BTC price to a daily low of $41,250.

Many crypto holders who were disappointed by the lack of a blow-off top to close out 2021 are also expecting fireworks to start 2022, but historically speaking, January has been one of the most disappointing months for BTC, according to a recent report from Delphi Digital.

Delphi Digital pointed to a slowdown in global liquidity growth and tighter policy expectations as the primary source of headwinds for Bitcoin and they highlighted that these factors have also led to weakness in the stock market, which is considered to be strongly correlated with the price movements seen in BTC.

Another source of weakness identified by Delphi Digital was a lack of liquidity in the perpetual and futures markets along with a drop in BTC open interest over the past two months.

Delphi Digital said,

As for what comes next, Delphi Ditial indicated that short-term momentum indicators appear to signal the worst may be behind us and the analyst noted that the Fear & Greed index is at levels not seen since May 2021.

Related: Bitcoin hodlers under siege at $42K as 30% of BTC supply flips from profit to loss

A similar trend of weakness was addressed by crypto market intelligence firm Decentrader, which observed that the number of overly bullish Im buying the dip traders on crypto Twitter was challenged at around $41,000.

The analysts suggested that based on the size and consistency of the BTC drawdown over the past two months, a move out of the range to the upside is the most probable outcome eventually and they expect the price to run towards the 200DMA and the point of breakdown in the summer at around $49,000 $50,000.

Decentrader said,

For traders hard hit by this latest drawdown, Twitter user John Wick issued a positive perspective.

The overall cryptocurrency market cap now stands at $1.976 trillion and Bitcoins dominance rate is 40%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

See more here:
Analysts warn that Bitcoin could dip to $38K 'before an eventual breakout' - Cointelegraph