Jan 22, 2024

Is the Crypto Community Expecting a Sub-$40K Bitcoin? 5 Things You Need to Know This Week

The Current State of Bitcoin (BTC) and Potential Catalysts for Volatility As we enter the fourth week of January, Bitcoin (BTC) finds itself in a precarious position as doubts arise about the current bull market for the cryptocurrency. The price of BTC continues to struggle, having reached a two-year high and now facing resistance from…

Are BTC longs waiting for sub-$40K? 5 things to know in Bitcoin this week

The Current State of Bitcoin (BTC) and Potential Catalysts for Volatility

As we enter the fourth week of January, Bitcoin (BTC) finds itself in a precarious position as doubts arise about the current bull market for the cryptocurrency.

The price of BTC continues to struggle, having reached a two-year high and now facing resistance from bulls. With the looming possibility of $40,000 support being breached, what can we expect next?

Now that the drama surrounding the launch of the first spot Bitcoin exchange-traded funds (ETFs) in the United States has subsided, market analysts are focusing on the potential catalysts for volatility in the coming weeks and months. However, the real question is how these events will affect Bitcoin itself.

But for now, the upcoming week seems to be a “calm before the storm.” While the Federal Reserve interest rate decision on January 31st and the countdown to Bitcoin’s next block subsidy halving are on the horizon, the battle for BTC price support rages on, with a nearly 20% drop from its recent highs.

Let’s take a closer look at the current landscape and gather insights from popular market participants to get a better understanding of where Bitcoin may be headed.

Exploring Web 3.0 Technology and Its Differences from Web 2.0

As the crypto world continues to evolve, terms like “scale ai,” “voyager crypto update,” and “unfi crypto” are becoming more commonplace. But what exactly is Web 3.0 technology, and how does it differ from its predecessor, Web 2.0?

Web 3.0 is the next generation of the internet, characterized by decentralized applications, blockchain technology, and increased user control over their data. In contrast, Web 2.0 is the current state of the internet, where users primarily consume content and interact with centralized platforms.

With the rise of terms like “the hideaways crypto,” “stacks crypto,” and “vgx crypto,” it’s clear that the crypto world is embracing the potential of Web 3.0 technology. As we move towards a more decentralized and user-controlled internet, it will be interesting to see how these advancements impact the world of cryptocurrency.

Investigating the Rising Popularity of Unbiased Crypto and Starlink Crypto

Two terms that have been gaining traction in the crypto community are “unbiased crypto” and “starlink crypto.” But what do these terms mean, and why are they becoming increasingly popular?

Unbiased crypto refers to cryptocurrencies that are decentralized and not controlled by any central authority or government. This concept aligns with the core values of the crypto world, where decentralization and freedom from traditional financial systems are highly valued.

Starlink crypto, on the other hand, refers to the potential impact of Elon Musk’s Starlink satellite internet project on the world of cryptocurrency. With the ability to provide high-speed internet to remote areas and potentially increase accessibility to crypto, it’s no wonder that this term is gaining attention.

As the crypto world continues to evolve, it will be interesting to see how these terms and concepts develop and shape the future of cryptocurrency.

Bitcoin traders keeping an eye on sub-$40,000 levels for potential long positions

Bitcoin saw another disappointing weekly close, reaching its lowest point in over a month, according to data from Cointelegraph Markets Pro and TradingView.

Although there was a final push towards $41,700, this was short-lived as the price dropped by $1,000 before the close.

As of now, BTC/USD is struggling to maintain the $41,000 mark.

Upon analyzing the situation overnight, popular trader Skew pointed out that there is strong bid support at $40,500 and below, which ultimately helped stabilize the market.

“There is also a lot of demand for BTC below this level,” part of Skew’s commentary on X (formerly Twitter) stated.

An accompanying chart displayed the BTC/USDT order book liquidity for the largest global exchange, Binance.

Despite this, many traders are anticipating a breakdown below $40,000. However, there is also a growing interest in long BTC positions above $35,000.

Others have also noted the significance of the current BTC price zone, with Skew describing it as “crucial on a 12H/1D closing basis.”

“Bitcoin is once again testing the $40,000 – $41,200 range that has been tested multiple times in the past 2 months,” trading suite Decentrader stated on the day.

Decentrader also mentioned that one of their proprietary trading tools, which is composed of a basket of popular indicators, is now showing a bullish trend.

“Will this range continue to hold the price?” they questioned.

The Week Ahead: GDP and PCE Data Pre-Fed Meeting

The upcoming week is filled with important economic data releases in the midst of the Fed’s blackout period.

However, these numbers may have limited impact on the Federal Open Market Committee’s decision on interest rates at their meeting on January 31st.

Preliminary Q4 GDP and the Personal Consumption Expenditures (PCE) Index for December, which is the Fed’s preferred inflation measure, are both scheduled for release.

The current state of inflation is uncertain – while stocks are reaching record highs and the market is anticipating rate cuts, recent data has shown higher than expected price increases.

“As stocks continue to climb, we have a number of significant events coming up in February,” noted trading resource The Kobeissi Letter in their weekly diary summary.

According to CME Group’s FedWatch Tool, there is a nearly unanimous 97.4% chance that rates will remain unchanged next week – suggesting that there is little expectation for any surprises from the Fed.

However, when it comes to Bitcoin, the growing divergence between its price action and the stock market cannot be ignored.

For Arthur Hayes, former CEO of BitMEX, the message is clear – the crypto market needs the return of global liquidity, which is a result of looser economic policies, in order to thrive. And with this potentially in question, the party may be coming to a halt.

“Why have $SPX and $BTC stopped moving in tandem since the launch of the US BTC ETF?” Hayes questioned, alongside a comparison chart of BTC/USD and the S&P 500.

Hayes also pointed to another key event happening alongside the FOMC meeting that will give insight into the future of US liquidity conditions.

Scaramucci predicts delay in ETF purchases

Despite initial optimism surrounding the launch of the ETF, the current lack of strength in BTC price has led to a call for patience from long-time market participants.

As reported by Cointelegraph, the unique dynamics of the post-launch market have resulted in a natural sell-off since January 11th.

At the center of this shift is the Grayscale Bitcoin Trust (GBTC), which has now become an ETF itself. This has caused investors to cash out as the trust’s share price has caught up with the spot price of Bitcoin.

Data from Bitcoin Treasuries confirms that GBTC’s holdings have significantly decreased this month, with almost 100,000 BTC being sold off.

Investors of GBTC are now looking to invest in other ETF products that offer more favorable terms. In an interview with Yahoo! Finance at the World Economic Forum in Davos, Switzerland, last week, Anthony Scaramucci, managing partner and founder of SkyBridge Capital, stated that regulations may slow down the inflow of ETF purchases.

“Many investors bought into the Grayscale Bitcoin Trust at 2%, when Bitcoin was priced at $50,000, $60,000, $69,000. Now that the ETF is available, they are able to sell their shares in the trust at a loss for tax purposes,” he explained.

Scaramucci also mentioned the 30-day cooling-off period after selling, which prevents investors from re-entering the same product. This creates a “great arbitrage” opportunity.

“There could be a surge in purchases 30 days after the initial sale,” responded Adam Back, CEO of Bitcoin technology firm Blockstream.

Back, who is known for his bullish stance on Bitcoin, had previously highlighted the significant impact of ETF inflows on the market, stating that they are 30 times larger than the supply impact of each halving event.

“Additionally, many traditional finance investors are momentum buyers. When the price goes up due to smart money, they follow suit, creating more news and buying more,” he wrote during a weekend debate.

Insights: Bitcoin profit-taking initiated in late 2023

Bitcoin is currently experiencing a prolonged period of profit-taking, despite its prices being well below its all-time highs.

Data collected by Glassnode, a leading on-chain analytics firm, and analyzed by James Van Straten, a research and data analyst at CryptoSlate, shows a consistent three-month trend of profit-taking.

Van Straten noted, “This is even longer than the 2021 bull run which lasted from September 2020 to February 2021 (155 days).”

This data suggests that the current buying and selling patterns may be a knee-jerk reaction to the recent ETF launch.

As reported by Cointelegraph, this event triggered a sell-off from $49,000, resulting in a mass exodus of short-term holders who sold their BTC at a loss.

New Focus on Whales as Distribution Gains Momentum

The cryptocurrency market remains bullish, even with a 20% decrease from its post-ETF peak.

This is evident from the Crypto Fear & Greed Index, which shows that the average crypto investor is still feeling optimistic about market conditions.

As of January 21st, the Fear & Greed Index was at 55/100, still within the “greed” range, after briefly dipping into “neutral” territory.

On January 11th, the index reached a high of 76/100, which is not considered “extreme” but is equivalent to the sentiment during Bitcoin’s all-time high in November 2021.

These numbers align with changes in Bitcoin investor behavior, as noted by popular crypto educator Wise Advice. Whales are selling off, and other large entities have also decreased their holdings.

According to Wise Advice, these wallets currently hold the lowest amount of BTC since June 2023, indicating distribution or selling.

Data from research firm Santiment supports this, as they predict a return to accumulation among whales.

Earlier, it was reported that a theory suggests a single large holder from the 2021 bull market may have triggered the current distribution trends.

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