The fallout from the Federal Reserve’s recent aggressive comments on raising interest rates as early as March continued to weigh heavily on the cryptocurrency market on January 6. The Crypto Fear & Greed Index has dropped to 15 and some traders are lamenting the possible start of a prolonged bear market.

Crypto Fear & Greed Index. Source: Alternative

Data of Cointelegraph Markets Pro Y TradingView show that the bears attempted to hit the lows set on January 5, which brought the price of BTC down to $ 42,439 during early trading on Thursday.

These are the reasons why Bitcoin traders say that a drop to $ 38,000 is the worst possible scenario
Daily chart of the BTC / USDT pair. Source: TradingView

Let’s take a quick look at where analysts think price could go in the next few days.

Bitcoin could bottom out between $ 38,000 and $ 40,000

According Mike Novogratz, CEO of Galaxy Digital Holdings and a staunch advocate of cryptocurrencies, this latest downward movement “has been low volume” and highlighted the fact that there is a “tremendous amount of institutional demand on the sidelines.”

As for whether Novogratz sees current market conditions as a good buying opportunity, the experienced trader told CNBC that “is waiting a little longer to buy cryptocurrencies” and suggested that the market “will be volatile in the coming weeks.”

Novogratz said:

“Bitcoin could find a bottom at the $ 38,000 to $ 40,000 level.”

BTC tries to set a higher low

A closer look at the recent BTC price action was offered by the cryptanalyst and pseudonymous Twitter user ‘Rekt Capital’, who public The chart below comparing current market conditions to those seen the last time BTC’s price fell below its 50-day exponential moving average (EMA).

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These are the reasons why Bitcoin traders say that a drop to $ 38,000 is the worst possible scenario
1-week chart for the BTC / USD pair. Source: Twitter

According to Rekt Captial, BTC “has deviated below the 50-day blue EMA” and you are now in the process of trying to set a new higher minimum (HL), as represented by the dashed green line.

Rekt Capital said:

“In May 2021, BTC also formed a higher low (orange) by deviating below the 50-day EMA. BTC held the higher low initially, but the wick below it was also common.”

Based on the circled section in the chart above, Rekt Capital sees the possibility of BTC falling into the $ 40,000 range.

The price of BTC is in the “pocket of gold”

A final analysis that highlights the critical juncture in which the market finds itself was provided by the independent analyst Scott Melker, who public The chart below showing BTC trading between the 0.65 and 0.618 Fibonacci retracement levels.

These are the reasons why Bitcoin traders say that a drop to $ 38,000 is the worst possible scenario
1-hour chart of the BTC / USD pair. Source: Twitter

According to Melker, this range is known as the “pocket of gold” Y “It is considered the most viable place to buy or sell an asset and look for a reversal.”

Melker said:

“The price is currently in the gold pocket of the move from $ 28,600 to $ 69,000.”

The total cryptocurrency market capitalization currently stands at $ 2.077 trillion and Bitcoin’s dominance index is 39.5%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and business move involves risk, you should do your own research when making a decision.

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