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Since the drop on January 12, the price of Bitcoin continues to trade in a narrow range, almost fixated at $42,500. This stability is fueled by the ongoing GBTC redemptions and the anxiety brought by thousands of BTC sent to Coinbase. While investors hope for further increases, hundreds of millions of dollars worth of BTC have left the Grayscale reserves.
Why Did Altcoins Fall?
A nice surprise rise could have occurred yesterday, but the 5-hour Coinbase hearing did not yield a clear result. The process between SEC and Coinbase may take longer than expected. Yesterday we shared all the details about this hearing, Coinbase seems to have a strong hand and for now, the Judge is not convinced by the SEC. If Coinbase wins this case, the SEC will no longer have the luxury of calling all altcoins securities.
The reason for the decline was the weakness on the BTC front. The cumulative value of cryptocurrencies has been trading within a rising parallel channel since December 2023, which generally includes corrective movements. The channel’s resistance trend line was rejected on January 11. This was followed by a continued decline, which is the technical rationale for the downturn.
Will Cryptocurrencies Rise?
For now, the cumulative value of cryptocurrencies has found support at $1.61 trillion, and whether it falls below this level or bounces back from it will determine the trend’s direction. Falling below the point where supports converge could lead to a 15% drop to $1.4 trillion. This could result in over 30-40% sell-offs in most altcoins.
Like the TOTALCAP, the BTC price also traded within a rising parallel channel during the same period, but there is a difference. A break from this channel occurred during the drop on January 12. This development, indicating the end of the upward movement, could feed a negative scenario for the cumulative value of cryptocurrencies. As long as BTC does not surpass this region, which it has confirmed as resistance, the decline seems likely to continue.
The most likely scenario seems to be a roughly 12% drop in the BTC price to $37,700. Of course, crypto is always full of surprises, and there is no obligation for expectations to materialize. Despite this bearish BTC price prediction, if the channel’s support line is reclaimed, we could see a new attempt towards $48,250.
