Some argue that it started a “crypto winter” citing the $ 2.1 billion in long-leveraged cryptocurrency futures contracts that were settled in the past seven days. The descending channel that guides Bitcoin’s negative performance over the past 63 days indicates that traders should expect prices below $ 40,000 by February.
Investor sentiment continued to decline following the Federal Reserve resolution on January 5. The monetary policy authority showed its commitment to reduce its balance sheet and increase interest rates in 2022. At the same time, the political turmoil in Kazakhstan added more pressure to the markets. The country was left without the internet amid the protests, causing the Bitcoin network’s hashrate to drop 13.4%. In just 11 days, bitcoin has lost about 15% of its value, in what is already the worst start to the year for this market since its birth.
“Tightening financial conditions is expected to negatively affect risk assets such as equities and cryptocurrencies as they become less attractive than safe haven bonds,” Kaiko experts say in their weekly newsletter. According to Kaiko, the impact of the Fed’s December meeting has made the correlation between bitcoin and traditional assets the highest in more than a year.
However, the behavior of investors who have entered to buy in the last falls, raising the price, again, above $ 42,000, makes experts think that the selling momentum is beginning to diminish. However, the increases appear to be limited to the area of $ 43,000, with $ 45,000 being the resistance to beat in the short term.
This rebound, moreover, was accompanied by a global cryptocurrency trading volume increase, which soared 43.99%, up to US $ 102,630 million, as operators tried to take advantage of the low prices of almost all the main tokens. Despite massive buying activity, the global cryptocurrency market capitalization was down 0.59% to $ 1.96 trillion.
In fact, all altcoins still tinged red, with drops for Ethereum, also leaving minimums since September. Technical analysis shows that number two crypto needs a close above $ 3,200 to make way for a recovery in price.
According to technical analysis, sentiment is pessimistic and the $ 2.1 billion in aggregate liquidations of futures contracts indicate that buyers are rapidly losing confidence. Only time will tell where the exact bottom is, but there is currently no indication of strong support from professional traders.
Source From: Ambito
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