The cryptocurrency market faced another day of weakness on Jan. 18 as the price of Bitcoin (BTC) fell lower putting additional pressure on the altcoin market as well. Currently, the Crypto Fear & Greed Index recorded “Extreme Fear” among investors with some traders warning that BTC price could soon fall below its recent low of $39,000.
Data from Cointelegraph Markets Pro and TradingView shows that the bulls lost control of the $42,000 support level during early trading hours on Tuesday as the bears hit BTC price to a daily low of $41,250.
January is historically weak for Bitcoin
Many cryptocurrency holders disappointed by the lack of a cap to close out 2021 were also expecting the fireworks to start in 2022, but historically speaking, January “has been one of the most disappointing months for BTC,” according to a recent report. of Delphi. Digital.
Delphi Digital pointed to “a slowdown in global liquidity growth and tighter political expectations” as the main source of headwinds for Bitcoin and highlighted that these factors have also led to weakness in the stock market, which is seen as it is strongly correlated with the price movement seen in BTC.
Another source of weakness identified by Delphi Digital was a lack of liquidity in the perpetual and futures markets coupled with a drop in BTC open interest over the past two months.
DelphiDigital said,
“For the most part, the price contraction was due to liquidity issues in the futures/perp market, triggering a series of sell-offs that exacerbated initial BTC price weakness.”
As for what comes next, Delphi Ditial indicated that “short-term momentum indicators seem to indicate that the worst may be behind us” and the analyst noted that the Fear & Greed index is at levels not seen since May 2021.
Bitcoin price could drop below $38,000
A similar trend of weakness was addressed by crypto market intelligence firm Decentrader, who noted that the number of overly bullish “I’m buying the dip” traders on crypto Twitter was challenged around $41,000.
Analysts suggested that based on the size and consistency of BTC’s drawdown over the past two months, “a move out of the bullish range is the most likely outcome eventually and they expect price” to run towards the 200DMA and breakdown point. in the summer around $49,000 – $50,000.”
decentrader said,
“We think we may need to see something else ranging between $44,000 and potentially $38,000 before an eventual breakout.”
For traders heavily affected by this latest drop, Twitter user ‘John Wick’ issued a positive outlook.
I just want to take a moment to tell you guys who might be underwater in your positions that it’s okay.
Every cycle this happens. Most of us have to wear these battle scars at least once in our journey to become better traders/investors. I know I did. I know I did.
Just don’t give up.
— John Wick (@ZeroHedge_) January 18, 2022
The global cryptocurrency market capitalization now stands at $1.976 trillion and the dominance rate of Bitcoin is at 40%.
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