Here’s why Bitcoin traders say a drop to $38K is the worst case scenario

The fallout from the Federal Reserve’s latest hawkish feedback about elevating rates of interest as quickly as March continued to weigh closely on the cryptocurrency market on Jan. 6. The Crypto Fear & Greed index has been dialed down to 15 and a few traders are lamenting the doable begin of an prolonged bear market. 

Crypto Fear & Greed Index. Source: Alternative

Data from Cointelegraph Markets Pro and TradingView reveals that bears tried to problem the lows set on Jan.5, bringing BTC value down to $42,439 throughout early buying and selling on Jan. 6.

BTC/USDT every day chart. Source: TradingView

Let’s take a fast take a look at the place analysts assume the value would possibly go in the subsequent few days.

Bitcoin might backside between $38,000 and $40,000

According to Mike Novogratz, the CEO of Galaxy Digital Holdings and a staunch cryptocurrency advocate, this newest transfer down “has been on low volume” and highlighted the indisputable fact that there is a “tremendous amount of institutional demand on the sidelines.”

As for whether or not or not Novogratz sees the present market circumstances as a good shopping for alternative, the skilled dealer informed CNBC that “he’s waiting a little longer to buy crypto” and recommended that the market will “be volatile over the next few weeks.”

Novogratz mentioned,

“Bitcoin could find a bottom at the $38,000 to $40,000 level.”

BTC makes an attempt to set up a larger low

A better take a look at the latest BTC value motion was supplied by crypto analyst and pseudonymous Twitter person Rekt Capital, who posted the following chart evaluating the present market circumstances to people who have been seen the final time BTC value fell beneath its 50-day exponential shifting common (EMA).

BTC/USD 1-week chart. Source: Twitter

According to Rekt Captial, BTC “has deviated below the blue 50 EMA” and is now in the means of making an attempt to set a new larger low (HL) as represented by the inexperienced dashed line.

Rekt Capital mentioned,

“In May 2021, BTC also formed a Higher Low (orange) upon deviating below the 50 EMA. BTC held the HL initially but wicking below it was common also.”

Based on the circled part supplied on the above chart, Rekt Capital sees the risk of BTC dropping down into the $40,000 vary.

Related: Bitcoin value bounces off $42K as order ebook imbalance turns ‘loopy’

BTC value is in the “golden pocket”

A remaining bit of research highlighting the essential junction the market is in was supplied by unbiased market analyst Scott Melker, who posted the following chart exhibiting BTC buying and selling between the 0.65 and 0.618 Fibonacci retracement ranges.

BTC/USD 1-day chart. Source: Twitter

According to Melker, this vary is referred to as the “golden pocket” and “is considered the most viable place too long or short an asset and look for a reversal.”

Melker mentioned,

“Price is currently in the golden pocket of the move from $28,600 to $69,000.”

The total cryptocurrency market cap now stands at $2.077 trillion and Bitcoin’s dominance fee is 39.5%.

The views and opinions expressed listed here are solely these of the writer and don’t essentially mirror the views of Cointelegraph.com. Every funding and buying and selling transfer includes threat, you must conduct your individual analysis when making a choice.