- The world’s largest cryptocurrency, Bitcoin
(BTC), has recently faced significant selling pressure, and the BTC price dropped to $40,000 earlier this afternoon.
- Santiment reports that traders are still optimistic about the long-term effects of the approval of the US Securities and Exchange Commission’s (SEC) Spot Bitcoin ETF.
- In a recent analysis, an analyst suggests the possibility of a multi-month correction or stagnation for the Bitcoin price.
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Questions about how deep the correction in Bitcoin’s price could be are puzzling the community: How low could it go?
How Deep Will the Correction in Bitcoin Price Be?
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The world’s largest cryptocurrency, Bitcoin (BTC), has recently faced significant selling pressure, and the BTC price dropped to $40,000 earlier this afternoon. This situation is attributed to significant outflows from the Grayscale Bitcoin Trust (GBTC) fund, directed towards newly introduced Bitcoin ETFs. Renowned crypto analyst Ali Martinez highlighted that Bitcoin’s price movements are in line with a parallel channel. According to Martinez, this indicates that Bitcoin is facing resistance at the $48,000 upper limit.
The analyst anticipates a pullback for Bitcoin, expecting the price to drop below $34,000. Then, Martinez foresees a recovery where Bitcoin aims to return to the $57,000 upper limit. This observation provides valuable insights into the potential price trajectory of Bitcoin, offering a perspective on the main support and resistance levels within the established parallel channel.
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Santiment, a significant on-chain data provider, reports that traders are still optimistic about the long-term effects of the US Securities and Exchange Commission’s (SEC) approval of 11 Spot Bitcoin ETFs on January 10. However, Santiment notes a notable change in sentiment, suggesting that the Fear of Missing Out (FOMO) surrounding these approvals may have contributed to a local cryptocurrency market peak.
Experts argue that widely anticipated approvals were already factored into market prices when the announcements were made, thus causing a subsequent decline in the value of Bitcoin. After experiencing a significant drop to $40.6 thousand, representing a 16.9% decrease from last week’s peak market value, Santiment observes that the narrative around these ETFs could shift.
Monitoring whether the mass sentiment turns negative and associates terms like “fraud,” “scam,” or “disaster” with the approved ETFs is a significant focus of attention. If negative sentiment arises around the topic that initially attracted high prices from October to December, Santiment predicts that Fear, Uncertainty, and Doubt could lead to sales from new traders.
In a recent analysis, the analyst suggests the possibility of a multi-month correction or stagnation for the Bitcoin price. According to the analysis, this trend could mean that funds in stronger hands within the market could lead to a robust bull run in the future. Given current market conditions, attention is focused on the short-term cost basis for Bitcoin, which currently stands at $37.8 thousand.
This level has served as a support level in bull markets and a resistance level in bear markets throughout history, adding significance to its role in shaping market dynamics. The insights provided by the analyst offer a nuanced perspective on how historical price levels may influence market trends for Bitcoin.