The cryptocurrency market experienced another day of weakness on January 18 when the price of bitcoin (BTC) fell and further pressure was also placed on the altcoin market. At the moment, the cryptocurrency fear and greed index has registered “extreme fear” among investors, and some traders warn that the price of bitcoin may soon fall below the recent low of $ 39,000.
Index of Fear and Greed in Cryptography. Source: alternative
Data from Cointelegraph Markets Pro and TradingView show that the bulls lost control of the $ 42,000 support level in the early hours of trading on January 18, when the bears reached a daily low of $ 41,250.
1-day BTC / USDT chart. Source: Trading View
Historically weak January for Bitcoin
Many cryptocurrency holders who were disappointed with the lack of an explosive rise in 2021 also expect fireworks to start in 2022, but historically January has been “one of the most disappointing months for BTC”, according to a recent Delphi report. Digital.
BTC / USD has normalized performance since the beginning of the year. Source: Delphi Digital
Delphi Digital notes that “a decline in global liquidity growth and tighter political expectations” is the main source of headwinds for bitcoin, and emphasizes that these factors have also led to weakness in the stock market, which is closely linked to the price. Movements observed in bitcoins.
Another source of weakness identified by Delphi Digital was the lack of liquidity in the perpetual and futures markets, combined with a fall in open interest in bitcoin over the past two months.
Delphi Digital sa:
“Most of the deflation was driven by liquidity problems in the perp / future market, which led to a series of liquidations that exacerbated the fall in BTC’s starting price.”
Regarding the next, Delphi Ditial noted that “short-term momentum indicators suggest that the worst may be behind us”, and the analyst noted that the fear and greed index is at levels not seen since May 2021.
Related topics: Bitcoin traders “under $ 42,000 blockade” when 30% of Bitcoin supply jumps from profit to loss
The Bitcoin price may fall below $ 38,000
A similar weakness trend was discovered by the cryptocurrency firm Decentrader, which noted that overly optimistic “I buy withdrawals” traders on crypto-Twitter had problems with around 41,000 dollars.
Analysts have suggested that based on the volume and consistency of bitcoin withdrawals over the past two months, “a range-up breakout is the most likely outcome at the end, and they predict the price is” heading towards 200 DMA and post-year the breaking point is around 49,000- $ 50,000. ”
Btc / usd 1-day chart. Source: Decentrader
“In our view, we may have to see another price in the range of $ 44,000 to $ 38,000 before the final eruption.”
For traders who have been hit hard by this recent withdrawal, Twitter user John Wick has been positive.
The total market value of cryptocurrency is currently $ 1.976 trillion and the Bitcoin dominance is 40%.