Bitcoin Volatility and 'Sell-The-News' Sentiment Push Inscription Tokens ORDI and SATS Down in January's Crypto Market
Summary:
The cryptocurrency market recorded a significant decline in January, especially affecting Inscription tokens such as ORDI and SATS. The underperformance is largely due to Bitcoin's price volatility and a "sell-the-news" sentiment prevalent in the crypto market. Additionally, technical conditions like bearish divergence signals have also influenced the recent drop in prices. The forecast suggests a further potential decline for ORDI, while SATS could possibly rebound.
In January, the cryptocurrency market witnessed a significant decline in various digital assets with ORDI and SATS, both BRC-20 tokens also known as Inscription tokens, hit the hardest. Multiple factors are responsible for this dip, including the volatility of Bitcoin's (BTC) price.
Particularly, since the start of 2024, ORDI and SATS prices have dropped by about 34.5% and 50% respectively. This downward trend is primarily driven by a "sell-the-news" sentiment sweeping across the crypto market, with Bitcoin leading the pack. As of January 25, the correlation between ORDI and BTC stood at 0.66, maintaining a predominantly positive trend over time.
Adding to the bearish momentum is the discernible drop in inscription fees and Bitcoin's declining block size share, indicating a lessening demand for Bitcoin ordinals. As Bitcoin Ordinals leverage Bitcoin's blockchain, the value moves of inscription tokens typically mirror those of BTC. ORDI, for instance, embeds data straight into the Bitcoin blockchain, generating a singular digital artifact present within Bitcoin’s transaction outputs.
Technical factors, like bearish divergence signals, have also influenced the recent price drops of ORDI and SATS. For instance, the ORDI/USDT daily chart showcased a distinct bearish divergence pattern between December 5, 2023, and January 2, 2024. While the ORDI’s price was posting higher peaks, its relative strength index (RSI) was seeing decreasing highs. This was followed by a 45% price decrease, a token reaction to the bearish divergence signal, where the gap between the RSI and the price activity foretells a price correction. Similarly, SATS’s price saw a drop of over 60% after registering bearish divergence with increasing prices and declining RSI.
From a technical point of view, ORDI seems set for further decline in the upcoming days or weeks. The cryptocurrency is currently experiencing an ascending triangle reversal breakdown, a scenario where an ascending triangle pattern ceases to be a continuation pattern, thereby initiating a trend reversal.
ORDI's breakdown target appears to be approximately $38.50 by February. This is based on the maximum distance between the upper and lower trendlines of the triangle deducted from the breakpoint.
On the flip side, SATS has dropped to its resistance-turned-support level of $0.00000036. Meanwhile, its RSI has fallen below 30, indicating an oversold condition. Both indicators suggest a potential bounce back to 0.00000043 by February. Should SATS drop below the $0.00000036-support level, it could risk a price fall towards its 0.786 Fib line of $0.0000029.
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Published At
1/25/2024 5:25:00 PM
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