On January 9th, Bitcoin’s price plummeted to a new low of $91,055, marking its lowest value since December 1st. The market was left wondering if the next psychological support range would be broken, potentially leading to a decline below $90,000. However, several factors suggest that BTC may avoid such a drop.
Crypto Fear & Greed Index Drops to Three-Month Low
The Crypto Fear & Greed Index, which tracks broad market sentiment, dropped from 78 to 50 after the BTC price fell by 9% between January 7th and 10th. This plunge is its biggest drop over the past few years, shifting the sentiment from ‘greed’ to ‘neutral’.
Historical Reversal Pattern
Cointelegraph reported that this recent drop in the index is a positive development, as historically, BTC prices have exhibited a reversal whenever the index has dropped to a neutral or fear zone. This historical pattern suggests that a potential correction may be on the horizon.
Bitcoin Metrics Indicate ‘Market Peak’ Is Not Yet In
The failure of Bitcoin to hold a position above $100,000 on January 6th raised bearish concerns. A series of four liquidation events in two months indicated potential weakness and liquidity drought. However, from a fundamental point of view, Bitcoin hasn’t triggered any bull market peak indicators.
Data from CoinGlass
CoinGlass highlighted that the apex crypto asset is yet to retest or surpass its previous market top signals. The bull market peak indicators consist of 30 conditions varying between charts and indexes. None of these metrics have tapped previous bull market highs from 2017 and 2021.
Mikybull’s Analysis
Mikybull, a crypto analyst, implied that these price dips remain an ‘opportunity’ before the expected rally. This sentiment is shared by many in the market, as institutional investors have been actively accumulating Bitcoin since the end of December.
Institutional Demand Remains High
CauĆŖ Oliveira, head of research at Blocktrends, mentioned that institutional investors have accumulated over 34,000 BTC, worth $3.2 billion, since it dropped below $108,000 on Dec 17th. This implies that institutional demand remains high despite the recent sell-off.
MAC.D’s Take
MAC.D, a verified CryptoQuant analyst, said that while short-term investors are experiencing losses, it offers a window for accumulation rather than a reason to panic sell. He stated: ‘Selling coins at this juncture might prove to be a very unwise decision.’
The Impossibility of Selling $6.5 Billion in BTC
The rumor surrounding the US government potentially selling over $6.5 billion in BTC has been a key bearish catalyst impacting Bitcoin’s price over the past two days. However, crypto commentator Miya said it might be ‘impossible’ for the government to execute the sales within six trading days.
Complexity of Selling High Amounts of BTC
Miya highlighted the complexity of selling such high amounts of BTC during an imminent key political event. With President-elect Donald Trump taking office on January 20th, the issue gets more complicated as he plans to establish a Bitcoin reserve, making it a topic of discussion during his official appointment.
A Reversal Is More Than Likely
In short, the crypto enthusiast argued that a reversal is more than likely for Bitcoin since the market has already priced in the bearish speculation. After sweeping the lows below the previous range on the daily chart, Bitcoin liquidity pools are now chasing the upside, as indicated by Mikybull.
Conclusion
While the possibility of a wick below $90,000 for Bitcoin remains possible, the analyst predicted that a V-shaped recovery would be on the cards. This sentiment is echoed by many in the market, who believe that institutional demand remains high and that short-term volatility will lead to opportunities for accumulation.
Key Takeaways:
- The Crypto Fear & Greed Index dropped to a three-month low, indicating a shift from ‘greed’ to ‘neutral’.
- Historical reversal patterns suggest that a potential correction may be on the horizon.
- Bitcoin hasn’t triggered any bull market peak indicators, and institutional demand remains high.
- The impossibility of selling $6.5 billion in BTC within six trading days has raised doubts about the bearish speculation.
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- The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article is for general information purposes only and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
