Bitcoin price is once again below $41,000, and the strengthening of sellers with declining volumes made the drop unsurprising. Whales, after the ETF approval, have been selling off billions of dollars worth of BTC. On the bright side, the increase in sales from long-term holders to short-term investors is considered a bullish signal.
Why Have Cryptocurrencies Fallen?
The exit from altcoins started early. Investors were expecting a shift back to altcoins after the initial sales in January and subsequent ETF approval, but the crowd viewing $49,000 as a satisfying profit-taking zone prevented this. Now, a deeper correction seems more likely.
The cumulative value of cryptocurrencies has been falling since the beginning of January when it was challenging $1.8 trillion. The decline produced two long upper wicks considered as signs of selling pressure, thus the rise above the $1.61 trillion resistance area could not be sustained.
If the selling wave in cryptocurrencies continues, the cumulative value could retract to $1.4 trillion with a 12% loss, as previously mentioned. This scenario would lead to greater losses in altcoins.
Conversely, reclaiming the $1.61 trillion area could lead to a 35% increase towards the next resistance at $2.1 trillion.
Bitcoin Predictions
The Bitcoin price had been trading within a rising parallel channel since December. However, on January 12th, it broke below this channel, and we had discussed last week how this clearly indicated a continuation of the downtrend. Both the rise and the fall were foreseeable. The upward movement seems to have ended for now.
Bitcoin dropped to $40,258 on January 19th, and if this continues, it could fall 9% further to the $37,600 support level. This aligns with the target in the first section’s cumulative value chart of cryptocurrencies.
Despite this bearish BTC price prediction, regaining the support trend line of the channel could initiate a new move towards $48,500. This week will be the first uninterrupted trading week for spot Bitcoin ETFs, PCE data will be released, and the halving is approaching. Although the medium and long-term outlook appears positive, investors’ cautious stance may be justified for now.
