Bitcoin Holds $40,000 amid Market Speculation and Turbulence: A Glimpse at the Crypto Market
Summary:
Bitcoin continues to maintain a $40,000 price level heading into the third week of January, following a tumultuous start to the year. Observers speculate about the currency's next price move, while the launch of the U.S.'s first Bitcoin exchange-traded funds (ETFs) has triggered considerable volatility in the market. Predictions range from the possibility of a healthy support retest post-dip to the preservation of the peak for an extended period. Meanwhile, volatile trading conditions saw speculators selling their Bitcoin at a loss, while long-term holders remained largely stable. Upcoming estimates predict potential further growth in Bitcoin mining difficulty. ETH, however, appears to be recovering more robustly post-ETF, but analysts warn of the looming threat posed by $1.35 billion in new open interest.
As we enter the third week of January, Bitcoin (BTC) continues to hover around $40,000, following a period of extreme volatility at the start of the year. The question of where BTC's price will head next remains amidst the differing narratives prevalent in the market. Some believe the recent dip post-launch of the United States' first spot Bitcoin exchange-traded funds (ETFs) may establish a healthy support retest, while others predict the local peak will persist for an extended period.
In the turbulent seas of price movement, both ups and downs have caught Bitcoin traders off guard, as evidenced by a recently tallied liquidation. Now, as we begin a new week, the market may receive a short reprieve of a fortnight before any major catalysts take hold. In the near term, there are expectations that U.S. macroeconomic data indicators will slow somewhat ahead of a decision on Federal Reserve interest rates by the month's end. There's also an impression that speculative traders may have burnt themselves out following the sale of billions of dollars in BTC at a loss last week.
Having peaked at $49,000 on the launch day of the ETF, BTC quickly lost momentum. The consequent downturn took the market straight down to the lower bounds of its established trading corridor. Yet, Bitcoin proved resilient, avoiding a full retest of the $40,000 threshold. Instead, we witnessed two local troughs near $41,500, the latter occurring at the weekly close on January 14. Currently, Bitcoin is inching towards $43,000 following a slight overnight bounce.
Despite this resilience, bearish sentiments regarding Bitcoin's price post-ETF dip remain. Analyst Matthew Hyland warns that the recent downturn may not be behind us and a tumble toward the mid-$30,000 region could still occur. This falls in line with a prevalent hypothesis predicting a purge toward $30,000. However, while Hyland and others envisage a subsequent resumption of the bull run, some, like the contentious trader Il Capo of Crypto, believe we may see macro lows as deep as $12,000.
Market hopefuls may get a respite from this tumultuous ride this week, at least from a macro perspective. In the lead up to the next Fed meeting in two weeks, there is a mounting concern surrounding the uncertain inflation scenario. Unobserved Consumer Price Index (CPI) figures from last week revealed a higher-than-anticipated increase in prices for December.
Despite ETF week culminating in Bitcoin sales rather than purchases, it would seem that the event had inspired speculators to buy, anticipating an upward movement. Glassnode data shows a significant panic and rush to sell as the price swerved toward $40,000, with 88,000 BTC ($3.75 billion) being sold for less than the purchase price. The majority of these sales originated from short-term holders, while long-term holders maintained a relatively unresponsive stance.
In spite of the recent price activity, upcoming estimates suggest the possibility of an augmentation in Bitcoin mining difficulty. This week may see a further increment of 0.35% in difficulty at a Bitcoin price of $42,500, as per BTC.com data.
Meanwhile, post-ETF, the largest altcoin Ether (ETH) enjoyed a more favorable trajectory. Last week saw a swift increase in the ETH/BTC ratio, alongside ETH/USD reaching its highest point since mid-2022. Despite this positive trend, there are warnings of the impending threat posed by $1.35 billion in new open interest. At the same time, a shift of open interest away from Bitcoin toward Ether has been noted, with the latter seeing a potential surge due to anticipation of a possible Ethereum ETF.
Published At
1/15/2024 11:15:00 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.