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Updated January 15th, 2024 at 18:03 IST

Bitcoin consolidates near $42K after major dip over weekend

Currently trading around $42,000, there is a possibility of continued selling pressure for BTC for a few days if it goes lower than $41,000, experts suggest.

Anirudh Trivedi
Crypto
Crypto | Image:Republic Business
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Crypto market overview: The crypto market has shown a subdued performance over the weekend with many investors booking profits after the recent gains. The global crypto market capitalisation also witnessed a minor decline in the last 24 hours with Bitcoin losing close to 0.02 per cent. ETH has also shown a 1.39 per cent dip but still manages to hover above the $2,500 mark. 

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However, being an outlier, LINK (+6.9 per cent in the last 24 hours) registered positive price action over the weekend, owing to the boost in its developer activity and other on-chain metrics over the past month. 

The Crypto Fear and Greed Index has fallen drastically over the weekend from 71 points last week to 52 points today. With the market showing a neutral sentiments, more liquidations in the market could follow. 

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While talking about the low trading volume over the weekend, CoinDCX Research Team explains, “Over the weekend, the crypto market was quiet with low trading volume. From a technical perspective, BTC experienced a drop to $42,000 levels after reaching a new high at $49,000. Currently, it appears bearish to neutral as it is trading below the 20 EMA daily. The current level and the $41,000 level are crucial for BTC to maintain; otherwise, a bearish scenario could unfold.” 

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“ETH has showcased strength relative to BTC in recent days, following a substantial rally. Currently, ETH is consolidating, which is considered a healthy pattern. The key level for ETH is $2,450, and it needs to remain above this level. The local resistance for ETH is at $2,660,” CoinDCX added. 

Rajagopal Menon, Vice President, WazirX said, “Bitcoin will continue to look for a solid support level with investors playing it cautious with the token in the absence of any significant update before the halving takes place a couple of months down. Ethereum has demonstrated a consistent price trend over the past week, maintaining close proximity to its recent support levels of around $2500.”  

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“This trend is largely attributed to optimism surrounding the approval of a spot Ethereum ETF. It is predicted to go up to $3000 levels for resistance, but even if it climbs down to $2300 levels, it is a bullish indicator for buyers entering the market,” added Menon. 

Selling the news

Referring to this decline as a result of ‘sell-the-news’ sentiment after the Bitcoin ETF approvals, Parth Chaturvedi, Investments Lead, CoinSwitch Ventures said, “Currently trading around $42,000, there is a possibility of continued selling pressure for BTC for a few days if it goes lower than $41,000. However, the general price trajectory shows a consolidation with a bullish pattern. Amidst mixed views, analysts continue to predict an upward trend with BTC ETFs-induced institutional inflows and long-term investors looking forward to the halving event. In fact, after Blackrock’s spot BTC ETF offering, Larry Fink, the CEO, is now considering an equivalent product for ETH.” 

Edul Patel CEO of Mudrex also highlighted the same sentiment in the crypto market over the weekend. Patel said, “Despite expectations that the ETF approval would drive Bitcoin buying, the market seemed more inclined to sell the news for profit-taking. While Ethereum initially enjoyed significant gains after the spot ETF approval, it now appears to be undergoing a price correction. In general, the market sentiment has shifted to a more neutral stance following a period of greed.” 

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Shivam Thakral, CEO of BuyUcoin said, “The overall crypto market cap fell to the $1.67 trillion mark after Bitcoin slipped to the 42,000 level due to heavy liquidations of future options. Ethereum, the largest altcoin, is trading around $2,500 after it breached the $2,600 level last week. The Bitcoin traders liquidated their positions as they were not able to meet the margin requirements as the Bitcoin process went up and then retreated in a short span after Bitcoin ETF listings. The market is expected to remain volatile in the coming weeks owing to the macroeconomic conditions.

Future outlook

Sharing the future outlook for the crypto market, Vikram Subburaj, CEO, Giottus said, “Bitcoin has taken a decisive turn to the downside post ETF approvals and is now trading at $42,400. It is likely that the market priced in the ETF approvals in advance and hence a correction now. If BTC can hold $42,000 and consolidate, a rally towards $44,000 is possible in the near term. On the flip side, $40,000 should be the next big psychological support level to hold.” 

“Ethereum and key altcoins (Solana, Avalanche and Polkadot) are holding on to their gains well in the hope of BTC consolidating at current levels. Short-term support levels for key altcoins are - Ethereum ($2,480), BNB ($300), Solana ($92), Cardano ($0.53), and Polygon ($0.83),” added Subburaj. 

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Published January 15th, 2024 at 11:18 IST

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