Max E.Fri, Jan 21, 2022 5:37 PM
Bitcoin Falls Below $40,000: 17 January Price Digest
Trading in the US last night ended with the retreat of the leading indicators of business activity S&P 500 and Nasdaq. Capital began to exit risky assets due to the increase in the yield of ten-year Treasury bonds. The dollar index today reached 95.7 points – this is the maximum value since January 10.
The cryptocurrency market, following the stock indices, began to lose ground. If the night before BTC tried to gain a foothold above $43,000, then tonight it collapsed below $39,000. The Bitcoin exchange rate at the moment fell below $37,700.
At the time of publication, Bitcoin was trading at $38,979.76 (-7.41%).
Hourly BTC/USDT chart on Binance exchange. Data: Trading View.
In weekly terms, the capitalization of BTC decreased by almost 10% to $735.429 billion.
The increased correlation with the US market is also evidenced by data from Arcane Research. During the hours of the trading session in the US, there is a higher volume of transactions with Bitcoin. Analysts noted that in 2022 this trend has strengthened.
Analysts predict that the correction will continue in the coming days. The exit of investors from digital currencies will be observed against the backdrop of increased control over the crypto sphere in many countries.
The fear and greed index dropped to 19, which indicates the prevalence of bearish sentiment in the market.
Analyst Michael van de Poppe noted that the bulls failed to defend the $42,400-$42,700 support level, so the local trend broke. According to him, we should expect even more price reductions.
Bitcoin skeptic Peter Schiff emphasized that digital gold quotes have broken the line of the head and shoulders pattern. According to him, this model predicts a price drop below $30,000 — if this level is removed, “a collapse below $10,000 is very likely.”
Bloomberg Intelligence senior commodities strategist Mike McGlone said earlier that the stock market could correct by 10%-20%. According to him, the digital asset market will behave in a similar way, but Bitcoin has a chance to rise to $100,000 in 2022.
If BTC manages to gain a foothold near the $39.2K support zone, its price is likely to recover to the level of $40.5K, even despite the deteriorating market sentiment. However, if BTC fails to do so, the price wall retracement will be long and difficult. With the latest price crash, the BTC profit percentage also fell to levels last seen in July 2021. This indicates that over 30% of the BTC supply has changed hands since then. July 2021 is now holding on to unrealized losses. Based on historical patterns, whenever the percentage of BTC supply in profit falls in this way, a mid-term bottom is usually formed.
ETH also experienced a strong downward correction and tested support near the $2,800 level where it is currently trading. Many of the (recently) most prominent L1 tokens such as SOL and ADA have lost at least 10% of their value in the last few hours. Where the cryptocurrency market as a whole will go remains to be seen, but the next few days could prove very important in deciding its medium-term fate.