BTC price fell to new lows at $36,000, prompting analysts to call for a “Hail Mary close above $39,600” to stave off a bearish shift in Bitcoin’s market structure.
Market Update
Bitcoin (BTC) price continues to sell-off and the trigger effect is an even more apparent correction in altcoins and DeFi tokens. At the time of writing, the BTC price has dropped to a 6-month low, and most analysts are not optimistic about an immediate change.
Data from Cointelegraph Markets Pro and TradingView shows that a wave of selling that started late January 20 continued through midday on Friday when BTC hit as low as $36,600.
Here’s a look at what analysts have to say about the current downturn and what might persist in the coming weeks.
Traders expect a consolidation between $38,000 and $43,000
The sudden drop in BTC price led many crypto traders to predict various dire outcomes along an extended bear market. Others, such as independent market analyst ‘Rekt Capital’, are not quick to jump the gun and declare that all is lost.
As shown in the following chart posted of Rekt Capital, “the recent BTC rejection means BTC is currently in the lower end of the current $38,000-$43,100 range.”
According to Rekt Capital, “Bitcoin is only consolidating in the $38,000-$43,100 range,” but this support needs to hold to avoid a drop to a lower consolidation range.
Rekt Capital said,
“Technically, the $38,000 support area is what separates BTC from entering a $28,000-$38,000 consolidation range. Bitcoin was last consolidated in the aforementioned range in Q1 and Q2 of 2021.”
Head and shoulders pattern confirmed
David Lifchitz, managing partner and chief investment officer at ExoAlpha, mentioned analyzing BTC price action from a purely technical standpoint, who pointed out that “a massive head and shoulders pattern for BTC currently exists. completed with BTC broken neckline at $38,300. ”
From a theoretical point of view, Lifchitz notes that this model predicts a drop as low as $20,000, but he claims that “falls are usually less than that” and suggests “the $31,000 region.” could certainly be within sight.”
From a fundamental point of view, Lifchitz noted many factors are creating headwinds for BTC, including tightening from the US Federal Reserve, talk from EU regulators looking to ban exploit proof of work, take profits from the end of 2021 and continue to be uncertain about the economic future as it relates to the Covid pandemic.
Lifchitz said,
“Therefore, for Bitcoin, a drop to the mid-low $30,000s could certainly be around soon before the real dip buyers show up.”
Traders Looking to Earn BTC at $30,000
A Cointelegraph analyst and contributor Michaël van de Poppe, provides a look at how traders are reacting to this drop compared to the drop in June 2021. posted The following chart highlights key support areas for each period of weakness.
van de Poppe says,
“Back in June → People are waiting for $23,000 to $25,000 to buy. Right now → People are waiting for $30,000 to buy. Similar fake breakout on the upside to denuclearize then into support. “
A similar view has been made by trader and Twitter user nicknamed ‘Fomocap’, who posted The following chart outlines how BTC could perform in the coming days.
Fomocap says,
“Bounce bonus is $44,000 – $42,000, check again, if rejected $35,000 – $33,000. What do you think?”
Related: Crypto Twitter Responds to Bitcoin Dumping: ‘Ok Great’
Bulls need to close above $39,600
One last bit of insight has been provided by crypto trader Scott Melker, who posted The following chart shows the price breakdown below a critical level that needs to be recovered.
Melker said,
“The bulls are looking for a Hail to close above $39,600 daily. Closes below (especially weekly) are market structure breaks, lower lows, etc. The bears are merciless. ”
The overall crypto market capitalization stands at $1,801 trillion and Bitcoin dominance is at 40.4%.