Bitcoin continued to fall, hitting a six-week low below $40,000 on January 20. The sell-off following the launch of the Bitcoin exchange-traded fund (ETF) on January 11 shows that cryptocurrency traders believed the rumors and sold the news.
While most recently approved Bitcoin ETFs are seeing strong inflows, Grayscale Bitcoin Trust (GBTC) has seen net outflows of over $2.8 billion. FTX’s bankruptcy fortunes were the main reason. sellerIt sold about $1 billion worth of stock.
“Up to $3 billion has been invested in GBTC in the secondary market during 2023 to take advantage of the NAV discount,” JPMorgan analyst Nikolaos Panigirtzoglou said in a recent post. He expects arbitrageurs to book profits, putting pressure on Bitcoin in the coming weeks.
Institutional investors are also scaling back their Bitcoin purchases. According to CoinShares’ “Digital Asset Fund Flow Week”: report Bitcoin investment products announced on January 22 saw minor outflows of approximately $25 million last week, while short Bitcoin products saw inflows of $12.7 million.
BitMEX founder Arthur Hayes is bearish on Bitcoin in the near term. Hayes said in a Jan. 22
But it’s not all doom and gloom for the Bitcoin ETF space. Bloomberg Senior ETF Analyst Eric Balchunas tweeted On January 20th, nine Bitcoin ETFs excluding GBTC announced massive inflows, bringing their assets under management to $4 billion.
After the initial sell-off, Bitcoin is likely to stabilize as long-term investors are expected to view the decline as a buying opportunity.
Could Bitcoin and major altcoins bounce higher in the near term? Or will more selling follow? Let’s study the chart to find out.
BTC/USD market analysis
Bitcoin surged above the resistance line of an ascending channel pattern on January 11, but the bulls failed to sustain higher levels. This may have tempted profit-booking from the bulls, who pushed the price down to support on January 12th. After several days of consolidation, selling resumed on January 18th.
The moving averages have completed a bearish crossover and the Relative Strength Index (RSI) is in negative territory, indicating that the bears are trying to take control.
The $40,000 level is an important support level to watch out for during the downtrend. If the price bounces from the current level and rises above the moving average, it means that the correction phase is over.
On the other hand, if the price falls once again from the moving average, it means that sentiment has turned negative and traders are selling on the bounce. That increases the likelihood of a drop below $40,000.
If that happens, the BTC/USD pair could plummet to the next major support level near $35,500.
ETH/USD market analysis
Ethereum surged above the overhead resistance of $2,400 on January 10th and reached its $2,700 target on January 12th. At this level, the bears took aggressive profits and began a decline towards the breakout level.
Buyers attempted a bounce from $2,400 on January 19th, but the decline did not abate. They continued to sell and on January 22nd the price fell below the moving average.
A decline from current levels will likely result in selling at the 20-day exponential moving average (EMA). If the price declines from the 20-day EMA and falls below $2,400, a decline towards $2,100 becomes more likely. Bulls are likely to defend this level aggressively.
On the positive side, a close above the 20-day EMA would be the first sign of recovery for the bulls. The ETH/USD pair could then attempt to rise again to $2,600 and later to $2,700.
BNB/USD market analysis
Binance Coin reversed direction from the downtrend line on January 21st, indicating that bears are fiercely defending the level. The 20-day EMA has leveled off and the RSI is near its midpoint, indicating that the uptrend is losing steam.
Price action over the past few days has formed a symmetrical triangle, which usually acts as a continuation pattern. Buyers should drive and hold price above the triangle to indicate the resumption of an uptrend. The pattern target for the setup is $372.
If the price stays below the 20-day EMA, selling may increase and the price may fall towards the triangle support line. A break below this level could accelerate selling, so it remains a key level to watch in the near term.
If bears pull the price below the triangle, the BNB/USD pair could plummet to $260 and then to $238. This movement is a signal that the triangle has formed a reversal setup.
XRP/USD market analysis
Bulls attempted to push XRP above the 50-day simple moving average (SMA) on January 11th, but bears did not relent. Selling resumed and the bears dragged the price up to the symmetrical triangle support line on January 19th.
The 20-day EMA is trending lower and the RSI is near oversold territory, indicating that it is leading the bears. If support breaks, selling pressure is likely to increase. This could initiate a downward move towards essential support near $0.40.
Conversely, if the price bounces off the support line and rises above the moving average, it suggests that the XRP/USD pair could spend more time inside the triangle. If the price jumps above the downtrend line, the bulls will get back on track.
ADA/USD market analysis
Cardano rebounded sharply from the $0.46 breakout level on January 8, but the relief rally ran into severe selling pressure at the 20-day EMA. This suggests that bears are viewing the rally as a selling opportunity.
The price has again reached the $0.46 support level, an important level to watch. A bearish 20-day EMA and an RSI below 40 indicate that the bears have the upper hand.
If the bears break below $0.46, it would signal the start of a new downward movement. The ADA/USD pair could jump into strong support near $0.40.
Conversely, bulls will try to push the price above the 20-day EMA. If they do so, the pair could rise to overhead resistance at $0.62, where bears are likely to put up a strong defense again.
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