Here’s why Bitcoin traders say a drop to $38K is the worst case scenario

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The fallout from the Federal Reserve’s recent hawkish comments about elevating rates of interest as quickly as March continued to weigh closely on the cryptocurrency market on Jan. 6. The Crypto Concern & Greed index has been dialed down to fifteen and a few merchants are lamenting the attainable begin of an prolonged bear market. 

Crypto Concern & Greed Index. Supply: Different

Knowledge from Cointelegraph Markets Pro and TradingView exhibits that bears tried to problem the lows set on Jan.5, bringing BTC worth all the way down to $42,439 throughout early buying and selling on Jan. 6.

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BTC/USDT each day chart. Supply: TradingView

Let’s take a fast take a look at the place analysts suppose the value may go within the subsequent few days.

Bitcoin may backside between $38,000 and $40,000

According to Mike Novogratz, the CEO of Galaxy Digital Holdings and a staunch cryptocurrency advocate, this newest transfer down “has been on low quantity” and highlighted the very fact that there’s a “large quantity of institutional demand on the sidelines.”

As for whether or not or not Novogratz sees the present market circumstances as a superb shopping for alternative, the skilled dealer informed CNBC that “he’s ready just a little longer to purchase crypto” and instructed that the market will “be risky over the following few weeks.”

Novogratz mentioned,

“Bitcoin may discover a backside on the $38,000 to $40,000 degree.”

BTC makes an attempt to ascertain the next low

A better take a look at the latest BTC worth motion was supplied by crypto analyst and pseudonymous Twitter consumer Rekt Capital, who posted the next chart evaluating the present market circumstances to those who have been seen the final time BTC worth fell beneath its 50-day exponential shifting common (EMA).

BTC/USD 1-week chart. Supply: Twitter

In response to Rekt Captial, BTC “has deviated beneath the blue 50 EMA” and is now within the technique of attempting to set a brand new greater low (HL) as represented by the inexperienced dashed line.

Rekt Capital mentioned,

“In Could 2021, BTC additionally fashioned a Greater Low (orange) upon deviating beneath the 50 EMA. BTC held the HL initially however wicking beneath it was widespread additionally.”

Primarily based on the circled part supplied on the above chart, Rekt Capital sees the potential for BTC dropping down into the $40,000 vary.

Associated: Bitcoin price bounces off $42K as order book imbalance turns ‘crazy’

BTC worth is within the “golden pocket”

A ultimate bit of study highlighting the important junction the market is in was supplied by impartial market analyst Scott Melker, who posted the next chart exhibiting BTC buying and selling between the 0.65 and 0.618 Fibonacci retracement ranges.

BTC/USD 1-day chart. Supply: Twitter

In response to Melker, this vary is named the “golden pocket” and “is taken into account probably the most viable place too lengthy or brief an asset and search for a reversal.”

Melker mentioned,

“Worth is at present within the golden pocket of the transfer from $28,600 to $69,000.”

The general cryptocurrency market cap now stands at $2.077 trillion and Bitcoin’s dominance charge is 39.5%.

The views and opinions expressed listed here are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Each funding and buying and selling transfer includes threat, you need to conduct your individual analysis when making a choice.