The cryptocurrency market faced another day of weakness on January 18 when the price of Bitcoin (BTC) fell lower and additional pressure was also placed on the altcoin market. Currently, the Fear and Greed crypto index recorded โExtreme Fearโ among investors and some traders are warning that the price of BTC could soon fall below its recent low of $39,000.
Data of Markets Cointelegraph Pro Y TradingView It shows that the bulls lost control of the $42,000 support level during early trading hours on Tuesday as the bears hit BTC price to a daily low of $41,250.
January is historically weak for Bitcoin
Many cryptocurrency holders disappointed by the lack of a cap to close out 2021 were also expecting the fireworks to start in 2022, but historically speaking, January โhas been one of the most disappointing months for BTC,โ according to a recent report. of Delphi. Digital.
Delphi Digital pointed to โa slowdown in global liquidity growth and tighter political expectationsโ as the main source of headwinds for Bitcoin and highlighted that these factors have also led to weakness in the stock market, which is seen as is strongly correlated with price. movements seen in BTC.
Another source of weakness identified by Delphi Digital was a lack of liquidity in the perpetual and futures markets coupled with a drop in BTC open interest over the past two months.
DelphiDigital said,
โFor the most part, the price contraction was due to liquidity issues in the futures/perp market, triggering a series of sell-offs that exacerbated initial BTC price weakness.โ
As for what comes next, Delphi Ditial indicated that โshort-term momentum indicators seem to indicate that the worst may be behind usโ 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
Bitcoin price could drop below $38,000
A similar trend of weakness was addressed by crypto market intelligence firm Decentrader, who noted that the number of overly optimistic โI'm buying the dipโ traders on crypto Twitter was questioned around $41,000.
Analysts suggested that based on the size and consistency of BTC's drawdown over the past two months, "a move out of the bullish range is the most likely outcome eventually and they expect price" to run towards the 200DMA and breakdown point. in the summer at about $49,000 - $50,000."
decenterer said,
โWe think we may need to see something else that ranges between $44,000 and potentially $38,000 before an eventual breakout.โ
For traders hit hard by this latest drop, Twitter user 'John Wick issued a positive outlook.
I just want to take a moment to tell you guys who might be underwater in your positions that it's okay.
Every cycle this happens. Most of us have to wear these battle scars at least once in our journey to become better traders/investors. I know I did.
Just don't give up.
โ John Wick (@ZeroHedge_) January 18, 2022
The total cryptocurrency market capitalization is now $1.976 trillion and the dominance rate of Bitcoin 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 do your own research when making a decision.
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