The U.S. Treasury Secretary’s recent statements suggest a rough start for the cryptocurrency market in January. Bitcoin is struggling to maintain the support level of $88,000 and is unable to sustain a breakthrough above the $94,000 resistance level. As investors face increasing losses, analyst Darkfost predicts that deeper dips are inevitable.
Bitcoin’s Potential Plunge
Various analysts have differing projections, with scenarios suggesting a drop to $50,000. Darkfost, focusing on average investor costs, believes Bitcoin could dip further to around $74,000. Combining this with reasons why January might start poorly, a decline to $74,000 seems possible. If Japan announces an interest rate increase on Friday and the Fed maintains a dovish stance, this drop could happen sooner.
The analyst sharing the above chart noted an approximate 11.6% average unrealized loss. The first Long-term Holder (LTH) cohort, with an average cost of $97,320, is currently in the red. Increasing LTH losses is not a good sign, and while it may not have immediate effects, it could suppress the spot price in the mid-term. There is another crucial detail to consider.
“Interestingly, the 12-18 month UTXO group’s growth is notable. Since November 1, their costs rose from $63,217 to $74,745. This indicates the first LTH group maintains their positions, allowing UTXOs to transition to the next range. Therefore, the $74,000 level appears formidable, especially as technical analysis indicates a convergence here. Given current market dynamics, revisiting this level wouldn’t be surprising.”
Contrasting Bitcoin Analyses
Bitcoin is lingering at $87,000, and Michael Poppe, who is known for his optimistic outlook, is concerned that the bearish trend will persist unless $88,000 is reclaimed. Despite his optimism, Poppe warns of macroeconomic fluctuations, highlighting the potential clearing of liquidity at $83,000 and the formation of a double bottom at $80,000. Poppe’s concern signals either a dire market situation or a major impending crypto rally, with no in-between.
DaanCrypto shared the below chart, cautioning against the liquidity hunt game.
“In an indecisive market like recent weeks, liquidity is more crucial than ever. The core of these ‘Bart movements’ lies in the lack of liquidity and the quest for it. If one side goes to extremes, market makers and larger players hunt them down. Recently, no clear direction, volume, or liquidity has initiated a trend movement. While trading, knowing where potential stop hunts and reversals might occur is essential.”
