Where is Bitcoin’s bottom? | Forexlive


The
cryptocurrency market lost 2% of its capitalisation in the past day to $2.0trn.
Buyers stepped up in the market between 8-11 January, soon after a dip to this
round level. But as we can see, the bulls’ strength was not prolonged enough.

The
Crypto Fear and Greed Index added 2 points to 24. The 18th of November was the
last time we saw levels above 50. Since then, the cryptocurrency market has
been steadily in a downtrend, with the overall crypto market capitalisation
down 30%.

Bitcoin
is losing 2% overnight, retreating to the $42K mark, returning to an area of
local lows before last week’s rebound. Wariness prevails in traditional
financial markets on Tuesday morning, so a fall under $42K could quickly turn
into a test of the $40K level.

The
bitcoin chart is increasingly clearly showing a downward reversal with a
continuation within the three-month down channel. The RSI index on the daily
charts remains in neutral territory, meaning there is still room for a decline.
The 50-day moving average is deeper under the 200-day moving average,
indicating that the pair is in a bearish trend.

Ether
pulled back to $3180 from the region of $3500, and it is sinking under the
bears’ pressure.

The
methodical sell-offs are exhausting market participants, where the feedback
loop is solid: price increases spur purchases, pushing prices up even more.
Downturns or a prolonged period of sideways trading causes disappointment and
waning interest.

After all, many people come to cryptocurrencies looking for a
quick buck. They are willing to take high risks, but the lack of momentum
dampens the excitement. After rapid growth in 2020 and 2021, we should not be
surprised to see the market cool down.

The
long term weekly candlestick chart of Bitcoin shows that over the past seven
years, support turns the market around, even during a depression, it passes
through the 200-week moving average. This line is now near 19k, and by the end
of the year, it will be slightly above 20k.

A
bear market development for cryptocurrencies could push Bitcoin back to 20
before the end of 2022 in a pessimistic scenario. These levels could be the
best prices to buy, although experience suggests it could take another year of
sluggish growth before seeing a new powerful uptrend and FOMO.

This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.



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