Here’s why Bitcoin traders say a drop to $38K is the worst case scenario

The
fallout
from
the

Federal
Reserve’s
recent hawkish
comments

about
raising
interest
rates
as
soon
as
March
continued
to
weigh
heavily
on
the
cryptocurrency
market
on
Jan.
6.
The
Crypto
Fear
&
Greed
index
has
been
dialed
down
to
15
and
some
traders
are
lamenting
the
possible
start
of
an
extended
bear
market. 


Crypto
Fear
&
Greed
Index.
Source:
Alternative

Data
from

Cointelegraph
Markets
Pro

and

TradingView

shows
that
bears
attempted
to
challenge
the
lows
set
on
Jan.5,
bringing
BTC
price
down
to
$42,439
during
early
trading
on
Jan.
6.


BTC/USDT
daily
chart.
Source:
TradingView

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

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


According

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

As
for
whether
or
not
Novogratz
sees
the
current
market
conditions
as
a
good
buying
opportunity,
the
experienced
trader
told
CNBC
that
“he’s
waiting
a
little
longer
to
buy
crypto”
and
suggested
that
the
market
will
“be
volatile
over
the
next
few
weeks.”

Novogratz
said,

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

BTC
attempts
to
establish
a
higher
low

A
closer
look
at
the
recent
BTC
price
action
was
offered
by
crypto
analyst
and
pseudonymous
Twitter
user
Rekt
Capital,
who

posted

the
following
chart
comparing
the
current
market
conditions
to
those
that
were
seen
the
last
time
BTC
price
fell
below
its
50-day
exponential
moving
average
(EMA).


BTC/USD
1-week
chart.
Source:
Twitter

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

Rekt
Capital
said,

“In
May
2021,
BTC
also
formed
a
Higher
Low
(orange)
upon
deviating
below
the
50
EMA.
BTC
held
the
HL
initially
but
wicking
below
it
was
common
also.”

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



Related:




Bitcoin
price
bounces
off
$42K
as
order
book
imbalance
turns
‘crazy’

BTC
price
is
in
the
“golden
pocket”

A
final
bit
of
analysis
highlighting
the
critical
junction
the
market
is
in
was
provided
by
independent
market
analyst
Scott
Melker,
who

posted

the
following
chart
showing
BTC
trading
between
the
0.65
and
0.618
Fibonacci
retracement
levels.


BTC/USD
1-day
chart.
Source:
Twitter

According
to
Melker,
this
range
is
known
as
the
“golden
pocket”
and
“is
considered
the
most
viable
place
too
long
or
short
an
asset
and
look
for
a
reversal.”

Melker
said,

“Price
is
currently
in
the
golden
pocket
of
the
move
from
$28,600
to
$69,000.”

The
overall
cryptocurrency
market
cap
now
stands
at
$2.077
trillion
and
Bitcoin’s
dominance
rate
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
trading
move
involves
risk,
you
should
conduct
your
own
research
when
making
a
decision.

read original article here