Bitcoin (BTC) lost more than 17% of its value in the past few days. The decline seems to be cooling off a bit for now and the bitcoin price cautiously begins to turn green, but the fear is still very high.
Bitcoin Fear and Greed Index is 11 — Extreme Fear
Current price: $35,370 pic.twitter.com/Y3VdNqx9Eo
— Bitcoin Fear and Greed Index (@BitcoinFear) January 23, 2022
Some analysts speak of a possible bottom, but that seems to depend mainly on macroeconomic developments, especially the policy of the Federal Reserve. The Federal Open Market Committee (FOMC) will hold another meeting next Tuesday and Wednesday, which could again have major consequences for financial markets.
5/ $ BTC also acted like a leading indicator in Dec ’18 when Powell changed his tune & Mnuchin rolled out the plunge control team.
All eyes on Powell & FOMC Wednesday but BTC will serve as one of the more important indicators for macro markets over the next couple of months.
— John Street Capital (@JohnStCapital) January 22, 2022
Bitcoin price makes recovery attempt
Bitcoin initially made an additional dip yesterday morning all the way to $34,000, the lowest price since late July. Then the price immediately made a big bounce and rose to $36,000, but the resistance there was still too strong.
Bitcoin gradually fell again, but this time the price found support around $34,500. Whalemaps indicated in advance that the price might find support here because whales had bought a lot here.
— whalemap (@whale_map) January 21, 2022
Bitcoin then slowly started to recover slightly and rose again overnight to $36,000. However, this morning bitcoin was rejected again here. Bitcoin comes in at $35,850 at the time of writing Binance and €31,600. on Battle.
What can we expect?
However, whether bitcoin has actually reached a bottom is highly debatable. As mentioned before, the direction of the bitcoin price is currently mainly determined by macroeconomic conditions. In addition, the market is still somewhat overleveraged so if the price dips again, it could lead to another cascade of liquidations.
In contrast, the on-chain data is still a very bullish drawing picture. Bitcoin may be oversold and the miners still don’t capitulate, despite the mining difficulty being higher than ever.
Miners are not selling #Bitcoin
— Plan©️ (@TheRealPlanC) January 22, 2022
Also, the BTC supply on cryptocurrency exchanges continues to decline, a bullish sign.
#Bitcoin exchange balances continue their downward trend despite the ongoing price correction. Not saying this has to translate into price, but the decline is overall positive.
As always treat the latest data with caution, as it is subject to change. pic.twitter.com/lIElcrb4s8
– Jan Wüstenfeld (@JanWues) January 22, 2022
Panic if you feel like it but Bitcoin illiquid supply is going up relentlessly. pic.twitter.com/Mc8WAIf7Qt
– Lex Moskovski 🐙 (@mskvsk) January 22, 2022
That said, the demand is not high enough at the moment to include a bounce to cause. Due to the great fear in the market, many investors remain hesitant. So there is definitely a chance that this was not the bottom and a dip below $30,000 is still possible. As HODLers hold out but demand is not strong enough to trigger a breakout upwards, we may also be entering another period of consolidation.
Might be something here, I will let you decide…People going through a hard time now, so good luck to everyone. My personal targets remain. pic.twitter.com/DICFevY3ss
— Rickus 🇿🇦 🇦🇺 (@rickus_trades) January 23, 2022
When thinking about valuations, don’t forget the denominator has moved a lot too…. pic.twitter.com/DUSeQ9osix
— Jonathan Cheesman 🧊🧊 (@jon_ftx) January 23, 2022
— Matthew Hyland (@MatthewHyland_) January 23, 2022
Far from infallible, but this is the relation that I’ve seen historically. Tough macro environment, but it wouldn’t shock me if we’re near the bottom.
More people stacking bitcoin than looking for the exit. pic.twitter.com/pwVllFh1as
— T. | dataalways.eth (@Data_Always) January 23, 2022