Today the big question that investors are asking is whether Bitcoin found a floor for falls or is there room for the downtrend to continue, which led it to correct its price by 40% from the historical highs in November. “The only thing to hold on to right now is the important support it has in the area of US $ 40,000 and the origin of the last great upward momentum: the September lows,” said José María Rodríguez, an analyst at Bolsamanía.
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 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 entered to buy in the last falls, raising the price, again, above US $ 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.
Source From: Ambito
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