The recent statements of the US Treasury Secretary have sparked concerns about a challenging start to January for cryptocurrency markets. Bitcoin (BTC) is currently struggling to maintain its $88,000 support level and consistently break through the $94,000 resistance. Investors, who are increasingly losing confidence, are sitting on substantial losses. Meanwhile, analyst Darkfost expects further significant drops to be inevitable.
Bitcoin’s Potential Price Decline
While various analysts propose different targets, with some of the scenarios reaching as low as $50,000, Darkfost focuses on the investors’ average costs. He suggests that BTC might experience a deeper decline, possibly reaching $74,000. This prediction aligns with the notion that January could kick off poorly for cryptocurrencies. If Japan raises interest rates on Friday and the Federal Reserve continues its current pace, this event could occur sooner than anticipated.
The graph above states that the average unrealized loss is approximately 11.6%. The first cohort of long-term holders (LTH) with an average cost of $97,320, ranging from 6 to 12 months, is currently in a loss. While the increasing losses among LTHs might not have immediate consequences, they could exert downward pressure on the spot price in the medium term.
“It is interesting to note the growth in the 12–18 month UTXO group. Since November 1, costs have risen from $63,217 to $74,745.
This indicates that the initial LTH group is maintaining their positions under current conditions, allowing their UTXOs to transition to the next range. Thus, the $74,000 level appears to be a solid front line, especially due to its convergence with technical analysis. Given the current market dynamics, returning to this level wouldn’t surprise me.”
Two Perspectives on Bitcoin
While BTC hovers around $87,000, analyst Michael Poppe, known for his optimistic outlook, is concerned that the downward trend will continue unless BTC reclaims $88,000. Despite his optimism, Poppe highlights the possibility of liquidity being cleared at $83,000 and a double bottom forming at $80,000, due to macroeconomic volatility. If Poppe is worried, it may signal either a bleak turn of events or a significant upcoming surge in cryptocurrencies, as there’s often no middle ground.
Analyst DaanCrypto warns against the liquidity hunting game with the graph below.
“In the indecisive market we’ve witnessed in recent weeks, liquidity is more important than ever. The lack of liquidity and the search for it is at the core of these ‘Bart movements.’
If one side overreaches, market makers and larger players may hunt and eliminate it. Over the past few weeks, there hasn’t been clear direction, volume, or liquidity to really start a trend movement. If you’re trading, knowing where potential stop hunts might occur and where reversals could take place is essential.”
