Bitcoin price extended its decline below the $40,000 support zone. BTC is consolidating losses and remains at risk of more downsides below $38,500.

Bitcoin price is gaining bearish momentum below the $40,500 zone.
The price is trading below $40,500 and the 100 hourly Simple moving average.
There is a connecting bearish trend line forming with resistance near $40,850 on the hourly chart of the BTC/USD pair (data feed from Kraken).
The pair might correct above $40,000 but the bears could remain active near $40,500.

Bitcoin Price Takes Hit

Bitcoin price remained in a bearish zone below the $42,000 support zone. BTC bears gained strength and were able to push the price below the $40,000 support zone.

A new weekly low was formed near $39,451 and the price is now consolidating losses. It is slowly recovering above the $39,800 level. It is approaching the 23.6% Fib retracement level of the recent decline from the $42,260 swing high to the $39,451 low.

Bitcoin is now trading below $40,500 and the 100 hourly Simple moving average. Immediate resistance is near the $40,150 level. The first major resistance is near the $40,850 level. There is also a connecting bearish trend line forming with resistance near $40,850 on the hourly chart of the BTC/USD pair.

Source: BTCUSD on TradingView.com

The trend line is close to the 50% Fib retracement level of the recent decline from the $42,260 swing high to the $39,451 low. A clear move above the $40,850 resistance could send the price toward the $41,250 resistance. The next resistance is now forming near the $42,000 level. A close above the $42,000 level could push the price further higher. The next major resistance sits at $43,000.

More Downsides In BTC?

If Bitcoin fails to rise above the $40,850 resistance zone, it could continue to move down. Immediate support on the downside is near the $39,650 level.

The next major support is $39,500. If there is a close below $39,500, the price could gain bearish momentum. In the stated case, the price could drop toward the $38,500 support in the near term.

Technical indicators:

Hourly MACD – The MACD is now losing pace in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now below the 50 level.

Major Support Levels – $39,500, followed by $38,500.

Major Resistance Levels – $40,500, $40,850, and $41,250.

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An analyst has explained that the latest cooldown in the Ethereum futures market could suggest there is potential for a price rise to resume for ETH.

Ethereum Funding Rates Have Seen A Decline Recently

An analyst in a CryptoQuant Quicktake post explained that the ETH funding rates have seen a cooldown from their previously overheated levels. The “funding rate” refers to the periodic fees that futures contract holders on derivative platforms currently exchange with each other.

When the value of this metric is positive, it means that the long contract holders are paying a premium to the shorts to hold onto their positions. Such a trend implies that most traders share a bullish sentiment right now.

On the other hand, the under zero indicates that a bearish sentiment is currently dominant in the futures market, as the short traders are overwhelming the longs.

Now, here is a chart that shows the trend in the Ethereum funding rates over the last few months:

As displayed in the above graph, the Ethereum funding rates have been mostly positive during the last few months, implying that traders on the futures side of the market have mostly been bullish about the asset.

The few times that the metric did dip into the negative inside this period didn’t turn out to be anything major, as the indicator only attained low red values and rebounded back inside the green territory without too much wait.

The chart shows that during some phases of this lasting period of bullish sentiment, the metric attained particularly high values. “However, it’s crucial to note that elevated values in funding rates raise concerns about a potential overheated state in the perpetual markets, signaling the possibility of an impending long-squeeze event,” notes the quant.

A “squeeze” is an event in which a sharp swing in the price triggers a large number of liquidations, which in turn feed into this price move, elongating it and causing further liquidations.

When such a cascade of liquidations affects the long side of the market (that is, the price move in question is a rapid drawdown), the event is known as a “long squeeze.”

Generally, the side of the futures market most heavily dominated by traders is likelier to fall prey to a squeeze. Thus, when the funding rates are highly positive, a long squeeze can be more probable.

Recently, though, as Ethereum has gone through its latest correction, so have the funding rates. Although they are still positive, their magnitude may no longer be associated with an overheated market, and the risk of a long squeeze would have thus fallen.

“Consequently, there exists the potential for the price to resume its upward trajectory following the completion of the ongoing correction stage,” explains the analyst.

ETH Price

Ethereum has declined by around 5% during the past week as its price has now fallen under $2,400.

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The Aave community has overwhelmingly approved a proposal that will set the ball rolling for deploying Aave V3 on Solana, a smart contracts platform. The motion, put forward by the Neon Foundation and the Aave Chan Initiative (ACI), passed with a majority vote of 83% based on results posted on January 21.

Solana Fast Rising, DeFi Ecosystem Active

Solana has been rapidly expanding, with its native currency, SOL, emerging as one of the top performers in 2023. To put it in perspective, SOL prices exploded from about $10 in 2023 to around $125 by the end of the year. 

This surge saw SOL reverse losses of November 2022 while concurrently catalyzing events on the blockchain, spurring various activities, including the expansion of decentralized finance (DeFi), non-fungible token (NFT), and meme coin activities. 

Related Reading: Bitcoin Price Turns Red, Why BTC Could Tumble Below $40K

On the other hand, Aave has been expanding to multiple Ethereum Virtual Machine (EVM) compatible networks, emerging as one of the leading decentralized finance (DeFi) protocols. According to on-chain data from DeFiLlama on January 22, Aave manages over $6.9 billion worth of assets across ten chains. A big chunk, over 90%, comprises assets on Ethereum. Aave v3 has a total value locked (TVL) of $4.9 billion.

Aave V3 On Solana, What It Means

The TEMP CHECK proposers are keen on Aave v3 deploying on Solana, considering the blockchain’s rapid growth in the past year. They observe that the blockchain’s DeFi TVL and broad user base would likely benefit the lending and borrowing protocol, cementing its position as a market leader. 

If Aave is deployed on Solana, the protocol will access the deep liquidity on the blockchain. At the same time, users will access Aave services more conveniently. Subsequently, the proposers reiterated this move will cement Aave’s position as the leading liquidity market on-chain. Moreover, it will likely open up new opportunities for collaboration between the Aave, Solana, and other Neon EVM communities. 

Neon EVM is a cross-chain bridge for users to transfer assets between Ethereum and other blockchains. Through this bridge, Aave v3 will go live on Solana without any major reconfiguration of the protocol’s codebase. Among the tokens that will be initially supported is SOL. Users will be free to borrow USDC, a stablecoin.

The passing of the TEMP CHECK also reflects Aave’s ambition to expand across multiple blockchains beyond EVM networks. So far, Aave has been deployed on various platforms, including layer-2s like Arbitrum and Base, Avalanche, and Ethereum’s sidechain, Polygon.

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Dogecoin (DOGE) has recently received support from the crypto community and some negative comments from recognized crypto actors.

A discussion sparked on the X platform (Formerly known as Twitter) after Dogecoin’s Founder Billy Markus, also known as Shibetoshi Nakamoto, responded to a clip of the comments made by Ripple’s CEO Brad Garlinghouse about the memecoin.

Brad Garlinghouse “Doesn’t Get” Dogecoin

Last week, an X user uploaded a clip from the “Clear-Eyed About Crypto” panel at the World Economic Forum (WEF) meeting in Davos, Switzerland.

In the clip, the CEO explained that he believes “we will start seeing a clearer separation between useful and not-so-useful crypto assets.” While discussing the appeal of memecoins, Garlinghouse expressed that he “doesn’t get it,” referring to Dogecoin.

He added that, besides Elon Musk’s involvement with the memecoin, he doesn’t see the use case or the purpose of DOGE. The CEO stated:

And I think what we haven’t seen yet that I still think we will eventually see is a separation of wheat and chaff of when are the assets… how are these technologies being used to solve real problems that have real demand versus ones, you know, I’ll pick on dogecoin: I don’t get it. Other than Elon Musk as the central actor, I don’t see the use case and the purpose.

The Dogecoin founder challenged Ripple’s CEO comment, stating on the X platform that “dogecoin is essentially the same thing as Bitcoin with mildly different parameters and a dog mascot,” adding that comments such as Garlinghouse’s come from “just little brains pretending to be smart.”

An Intense Discussion Between Users And The DOGE Founder

Markus’ response sparked positive and negative answers from the online crypto community. One user harshly told the Dogecoin founder to “stop deceiving” himself and questioned his statement that Bitcoin and Dogecoin are the same by asking, “Why then do the Bitcoin worth so much more than the dogecoin?” Markus quickly dismissed it by labeling the question “such a low iq take.”

Regarding the Ripple CEO, another user claimed that Garlinghouse “doesn’t understand the world application” of memecoins, to which Markus replied, “he’s a crypto bro arguing that some cryptos (that he has a bag of) are better than other cryptos like every other boring low iq dillweed in this space.”

Lastly, when asked about his assessment of XRP, the Dogecoin founder refused to answer, simply stating, “i don’t care cuz i don’t have any.”

Dogecoin’s price has seen a 3.3% uprise in the last 7 days, according to data from CoinGecko. This could be linked to the discourse around Dogecoin’s possible integration as a payment method into the X platform, amplifying the community’s interest and optimism.

During the weekend, the cryptocurrency’s price stayed in the $0.08 price region and is trading at $0.08361 at writing time,  reflecting a 3.2% decline in the last 24 hours.

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Polygon (formerly Matic Network) is a game-changing Layer 2 scaling solution that addresses Ethereum’s scalability challenges. It empowers developers to create and deploy scalable, interoperable decentralized applications (dApps) by utilizing sidechains, plasma chains, and innovative scaling techniques. 

If you’re unfamiliar, sidechains are unique blockchains that are bound to the main Ethereum blockchain and are effective in supporting many Decentralized Finance (DeFi) protocols available on the Ethereum network. This enables rapid transaction speed and cost-effectiveness while maintaining the security and decentralization of the Ethereum network.

As a Layer 2 solution, Polygon operates in parallel to the Ethereum blockchain. Rather than individually validating each transaction, batches of transactions are sent to the Ethereum blockchain, significantly accelerating the validation process and reducing fees.

Polygon implements a proof-of-stake consensus mechanism wherein users can stake tokens for a predetermined duration to validate transactions. In return for their staking activities, participants are rewarded with MATIC tokens.

To ensure robust security, Polygon implements the advanced technique of “commit-chain” or “checkpointing.” It securely anchors the state of Polygon chains onto the Ethereum mainnet at regular intervals, enhancing data integrity and leveraging Ethereum’s inherent security. By capitalizing on Ethereum’s proven security measures, Polygon provides users with a reliable and resilient platform for their transactions and dApps.

The Polygon Network offers a comprehensive set of features that address scalability, security, and developer-friendliness. In this article, we will delve into the key attributes of the Polygon network and assess its substantial potential within the Ethereum ecosystem.

Features Of The Polygon Network

Cross-Chain Connectivity

Polygon network offers bridges that enable smooth transfers of assets and data across diverse blockchains. This fosters interoperability between chains, empowering users to leverage the advantages of multiple blockchain networks and access a broader array of decentralized finance (DeFi) protocols and applications. 

Polygon presents a Layer 2 scaling solution for Ethereum by leveraging sidechains to address scalability challenges. This solution facilitates quicker and more economical transactions, alleviating congestion and mitigating high fees on the Ethereum network

Ethereum Compatibility

Polygon seamlessly integrates with the Ethereum Virtual Machine (EVM), enabling developers to effortlessly migrate their existing Ethereum decentralized applications (dApps) to the Polygon network. This compatibility guarantees a seamless transition and adoption of Polygon while leveraging the extensive Ethereum ecosystem and developer tools.

Commit-Chain Checkpointing 

Polygon employs commit-chain checkpointing, securing the state of its chains by anchoring them onto the Ethereum mainnet. This approach guarantees the integrity of data, harnesses Ethereum’s robust security measures, and safeguards against any unauthorized alterations or tampering of the sidechain data.

Ethereum Network Security 

Leveraging Ethereum as its anchor chain, Polygon leverages the inherent security and decentralization of the Ethereum network. This integration fortifies the overall security of the Polygon ecosystem, ensuring users have access to a reliable and resilient platform for transactions and decentralized applications (dApps).

Developer-Centric Environment

Polygon provides an array of developer tools and infrastructure that empower developers to create and deploy decentralized applications (dApps) seamlessly. The Polygon Software Development Kit (SDK) offers a streamlined framework for building scalable applications on the network, simplifying the development process. 

Polygon also prioritizes the needs of developers by offering extensive documentation, guides, and resources. This ensures that developers have access to the necessary information and support to comprehend and harness the platform effectively. The availability of comprehensive resources fosters a vibrant developer community, encouraging collaboration and driving innovation on the network.

MATIC Token Utility And Exchange Availability

Polygon’s rebranding decision resulted in the retention of MATIC as its token ticker symbol. MATIC, an ERC-20 token, ensures compatibility with numerous Ethereum projects. Within the Polygon network, users rely on MATIC to secure and govern the network and cover transaction fees.

The MATIC token serves multiple purposes within Polygon’s ecosystem. Users can utilize MATIC for fee payments during transactions on the Polygon platform. MATIC can also be staked to contribute to the network’s security and earn rewards. 

Furthermore, MATIC holders have the ability to engage in governance activities by voting on proposed modifications, influencing the evolution of the network.

In terms of exchange availability, MATIC can be traded on various platforms, including prominent exchanges like UniSwap. This wide accessibility on exchanges enhances liquidity and provides individuals with convenient access to acquire or trade MATIC tokens.

How To Get Started On The Polygon (MATIC) Network

To engage in token transactions on the Polygon network, users must acquire a MetaMask wallet. MetaMask, a widely used browser extension wallet, provides a seamless interface for interacting with blockchain networks, including Ethereum. This user-friendly wallet is accessible as a browser extension for popular browsers like Google Chrome.

To ensure your MetaMask Wallet is added to your browser as an extension, click on the ‘Add to Chrome’ icon located at the top right corner, as depicted below:

After installation and setup, MetaMask enables users to effectively manage their cryptocurrency wallets, seamlessly interact with decentralized applications (DApps), and securely execute transactions on supported blockchain networks, all directly from within their web browsers. 

Remember to diligently write down your seed phrase on a physical sheet of paper and store it in a secure location. Avoid storing it online or on any electronic device to ensure maximum security.

For the next step, add the Polygon (MATIC) network to your Metamask wallet by following the instructions provided on the Metamask website here.

Trading On The Polygon (MATIC) Network

In order to execute trades on the Polygon (MATIC) network, you will need to fund your wallet with MATIC so as to enable you to cover gas fees. These fees cover the expense associated with utilizing computational resources related to transaction processing and validation.

To purchase MATIC tokens, you can utilize centralized exchanges like Binance. Simply copy your wallet address from MetaMask and proceed to transfer MATIC tokens from your Binance account to your MetaMask wallet. 

In addition, it is possible to acquire MATIC directly within the MetaMask wallet by utilizing conventional payment methods such as credit or debit cards and other similar options.  

Simply click on the “Buy/Sell” button within the MetaMask interface to access the designated section. Within this interface, you can specify the desired amount of MATIC (or any other token) you wish to purchase in terms of US dollars. Additionally, you can select your preferred payment method before finalizing the transaction by clicking on the “Buy” button. 

It’s imperative for users to be aware that when purchasing cryptocurrencies directly within MetaMask, you will be required to provide information such as your country and state. However, rest assured that this process is simple and can be completed within a minute.

You can expect your MATIC tokens to arrive in your wallet within a few minutes at most. Once they have arrived, you are ready to start trading tokens on the Polygon network. To begin your trading journey, navigate to UniSwap and commence your trading activities.

How To Trade Tokens On The Polygon Network Using UniSwap

Uniswap is an Ethereum blockchain-based decentralized exchange (DEX) protocol that enables users to trade Ethereum-based tokens from their wallets directly, eliminating the necessity for intermediaries or conventional order books. Uniswap provides users with a hassle-free method to purchase and sell various tokens.

To safeguard your wallet against fraudulent activity, ensure that you are accessing the legitimate Uniswap website. 

Begin by clicking on the “Launch App” button located in the top right corner, as depicted in the image below:

Next, proceed by selecting the “connect” option located at the top right corner of the UniSwap interface, as depicted in the provided image below:

Establish a connection with your preferred wallet, as shown in the image below. In this instance, the suggested wallet is Metamask:

After establishing the connection, adjust your Metamask settings to the Polygon (MATIC) network. (If you are already connected to the Polygon network, there is no need to make any network switches).

Once you have successfully connected MetaMask to the Polygon network, navigate to UniSwap to begin trading on the Polygon network through the platform.

Moving forward, you need to choose your desired tokens within the UniSwap interface. As Uniswap operates on a token-to-token trading model, click on the “Select Token” button to designate the specific trading pair you wish to trade against.

To illustrate, if you intend to purchase USDT using MATIC, simply choose the MATIC – USDT trading pair, specify the desired amount, and click on “Swap” or “Trade Now.” Confirm the transaction in your Metamask wallet, and you will be able to view the tokens in your wallet’s asset list.

Buying And Selling Tokens With Metamask

Metamask extension wallet, connected to the Polygon network, allows users to buy and sell tokens seamlessly. To proceed, ensure that you are connected to the Polygon network and possess MATIC tokens for swapping and covering gas fees.

Then, locate the “Swap” button, as illustrated below. Clicking on it will direct you to the Swap interface within the Metamask wallet.

Using the image above as a guide, users can search for tokens by name or contract address, just like on UniSwap. Enter the amount of MATIC you want to swap, make sure you have the correct token, and click on “Swap”. Once the transaction is confirmed, the tokens you bought will be sent to your wallet.

Tracking Token Prices on The Polygon  Network

Polygon network users can equip themselves with potential on-chain tools like Dexscreener, which opens up a world of new opportunities for traders. Dexscreener provides users with extensive market insights for specific tokens, ranging from real-time price data to in-depth contract information. It also helps users make well-informed trading decisions based on reliable and up-to-date data.

Stay ahead of the curve on the Polygon network with Dexscreener, keeping track of token metrics and market dynamics. 

Dexscreener on the Polygon network offers invaluable features tailored to users. One standout feature is its charting functionality, which provides real-time and historical price data for various tokens.

By utilizing these charts, users can gain valuable insights into price trends, trading volumes, and other important metrics.

Check below for a visual representation:

Conclusion

The Polygon network provides a robust and user-friendly environment for traders to thrive. With its innovative features, growing ecosystem, and commitment to scalability, Polygon is poised to play a pivotal role in shaping the future of decentralized finance.

As Polygon continues to experience growth and wider adoption, we anticipate a broader selection of applications and services tailored to meet the diverse requirements of traders. The network’s dedication to scalability, interoperability, and user satisfaction establishes it as a frontrunner in the ever-evolving blockchain industry.

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Bitcoin (BTC), the largest cryptocurrency in the market, has encountered a significant downturn following the waning hype around exchange-traded funds (ETFs), resulting in a 9% decline over the past fourteen days. 

However, Glassnode co-founders remain optimistic, asserting that the recent price corrections align with historical patterns and could propel Bitcoin to new heights, nearly doubling its current all-time high (ATH) of $69,000.

Healthy Market Correction?

In their latest analysis, the co-founders of the blockchain analytics firm posted on X (formerly Twitter), highlighting Bitcoin’s movement to the 6.618 Fibonacci Extension after a Bull Flag Correction. 

They draw parallels between the current correction and similar market conditions observed in late 2017 and 2020. The question arises: Will history repeat itself in 2024, and will Bitcoin reach its 6.618 Fibonacci Extension during this bullish market, setting a target of approximately $120K?

Examining the chart above, the analysis by the Glassnode co-founders reveals a comparable price correction following Bitcoin’s breakout above the $10,000 price level, which initiated the bull trend that propelled the cryptocurrency to a $15,000 increase before reaching its current ATH of $69,000.

Likewise, Bitcoin exhibited a similar bull flag pattern after surpassing the $29,000 price level, leading to a 22-month high of $48,900 on January 11. Notably, this surge occurred shortly after the approval of Bitcoin spot ETFs by the U.S. Securities and Exchange Commission (SEC).

Considering these developments, the key to Bitcoin’s future trajectory lies in maintaining support around the $40,000 level and further consolidation above it. If these conditions are met in the coming months, Bitcoin has the potential to reach the 6.618 Fibonacci extension, pushing its price as high as $120,000.

New All-Time Highs Expected For Bitcoin

Like Glassnode co-founder’s recent price analysis, crypto analyst Crypto Con also relies on historical patterns to gauge the future price action of BTC. According to Crypto Con, the mid-top of this Bitcoin price cycle occurred slightly faster than previous cycles but slower than the third cycle. 

Notably, this mid-top represents the only instance where it occurred outside of an early top, as indicated by the purple and yellow dots on the chart provided by the analyst.

Despite the 2019 mid-top occurring a year earlier than expected, the cycle top still manifested within the usual timeframe, plus or minus 21 days from November 28th, 2021. 

Crypto Con stresses that there is currently no evidence apart from complex theories to support the notion of an accelerated cycle. The analyst cautions against assuming that ETFs prevent potential Bitcoin price corrections. 

After November 28th, 2024, Crypto Con predicts the emergence of new all-time highs for the Bitcoin price of $90,000 or $130,000 and significant growth for the cryptocurrency market. 

At the time of writing, BTC is trading at $40,590, down 2.5% in the past 24 hours. If this level is breached, Bitcoin could drop towards the $37,650 level as it is the next major support for the cryptocurrency.

Featured image from Shutterstock, chart from TradingView.com

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The price of XRP is currently navigating bearish territory. Following its descent below the 200-day exponential moving average (EMA), the digital currency has further dipped beneath the critical 0.618 Fibonacci retracement level. Despite this downward trend, renowned crypto analyst Dark Defender offers a glimmer of optimism for the XRP army.

However, he also suggests that the market might face additional challenges first before embarking on a remarkable 1000% surge. In his latest analysis, the crypto analyst shared the weekly XRP/USD chart, employing a range of technical indicators including the Ichimoku Cloud, Fibonacci levels, ABC corrective patterns, and Elliott Wave theory.

XRP Price Could Drop Further

The chart provided depicts XRP’s price movements within the context of an Elliott Wave structure, which postulates that markets move in predictable, repetitive cycles. The analyst is identifying the progress of an ABC correction pattern within a larger Elliott Wave cycle. This correction consists of three waves: A (down), B (up), and C (down again), which is purportedly nearing completion.

Dark Defender’s analysis suggests that the current market structure for XRP mirrors that of a period in early 2021 when the crypto asset surged by 1,060% in less than four months. According to Dark Defender, this is indicated by the confluence of the RSI readings and price action.

The RSI, a momentum oscillator that measures the extent of recent price changes to evaluate overbought or oversold conditions, is marked with a white circle at a level of approximately 47.61, indicating neutrality. This is similar to the RSI level noted in 2021, suggesting a potential repetition in market sentiment and behavior. Moreover, the RSI is currently in an uptrend, as previously stated, with plenty of room to the upside.

The Ichimoku Cloud, a collection of indicators that show support and resistance levels, as well as momentum and trend direction, shows that XRP is trading within the cloud on the weekly timeframe. A breakout from the cloud could signal a strong trend in the direction of the breakout.

Fibonacci levels, derived from the Fibonacci sequence, are used to predict the extent of a correction or a continuation of a trend. The chart highlights several key Fibonacci retracement levels from a recent high to a low. These levels are $0.3917 (23.60%), $0.4623 (38.20%), $0.5286 (50.00%), and $0.6649 (70.20%).

According to the analysis, holding above or below the 50% retracement level at $0.5286 could indicate the likelihood of testing the next levels at $0.6649 or falling towards $0.3917, respectively. “#Equation: 1. XRP stays below $0.52 for 3 days —>$0.39 in play 2. XRP stays above $0.52 for 3 days—> $0.66 in play,” the analyst remarked.

Followed By 1000% Price Rally

Looking further ahead, the Fibonacci extension level at 161.80%, which translates to a price target of $1.8815, is highlighted as potential objectives for Wave 3 of the Elliott Wave cycle. The analyst has outlined a substantial potential increase, with a range up to $5.85, which would exceed the 161.80% Fibonacci extension level.

However, it’s important for traders to note the main resistance trend line that has been pressing down on the price (red line), as well as the support trend line that has been upholding the price during retracements (blue line) are the most crucial price levels at the moment. The convergence of these trend lines forms a triangle that is a focal point for the price action going forward. A decisive break in either direction could lead to significant price moves – either to $0.39 or $0.66 in the short-term.

In conclusion, Dark Defender’s analysis presents two pivotal scenarios, both leading to the anticipation of a major wave up (Wave 3) after the completion of the current corrective phase. “One way or another, wave 2 will be completed & wave 3 is expected to target $1.88 – $5.85 for both scenarios,” Dark Defender concludes.

At press time, XRP traded at $0.53195.

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The Bitcoin price took a downside turn over the weekend and seems ready to re-test critical support levels. The downside price action was triggered by a spike in selling pressure following the approval of Bitcoin spot Exchange Traded Funds (ETFs) in the US.

As of this writing, the Bitcoin price trades at $40,900 with a 2% loss in the past 24 hours. Over the last week, these losses doubled, with other assets in the crypto top 10 by market underperforming, except for Dogecoin (DOGE), which still records a 4% profit in the same period.

Bitcoin Price Loses Steam, How Low Can BTC Go?

Via the social media platform X, the founder and former CEO of crypto exchange BitMEX, Arthur Hayes, shared a forecast for the Bitcoin price. According to Hayes, BTC seems poised to lose its current levels.

The crypto founder and trader claims that the low timeframe price action will likely push Bitcoin below $40,000 and potentially below $35,000 if bulls fail to defend the higher area around these levels.

The main issue regarding the current market structure rests upon the liquidity in the Bitcoin market. As seen in the chart below and as pointed out by Hayes, the liquidity in the BTC market has been trending to the downside since the Bitcoin spot ETF was approved.

As a result, and due to the constant selling pressure from the Grayscale Bitcoin Trust (GBTC), the market has been trending to the downside and could maintain this course until the next major macroeconomic event.

On the above, the BitMEX founder stated:

Why has $SPX and $BTC stopped moving up together post US BTC ETF launch? Both are love more $ liq, which one is right about the future? $BTC is telling us that there are hiccups ahead for $ liq, next signpost is 31st Jan US Treasury refunding annc (announcement).

If Bitcoin Goes South, What Levels Could Hold The Line?

A pseudonym crypto analyst showed a cluster of buying orders stacked from the $38,819 to the $40,000 levels in a separate report. In other words, these levels should present opposition and seem like BTC’s biggest opportunity to bounce back, at least on low timeframes.

In that sense, the analyst stated the following, anticipating a possible short-term recovery, and showing the image below:

Some big zones starting to build up around 41K & 42K. Pretty certain we’ll at least take out that top part somewhere next week. Will see if price sustains after that.

Cover image from Unsplash, chart from Tradingview

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Bitcoin has been experiencing a downward trend recently, dropping from its 2023 all-time high of about $49,000 to below $41,000 at the time of writing. Despite this significant price correction, popular crypto analyst Kevin Svenson has predicted a new all-time high for BTC in the months after the 2024 Bitcoin halving. 

Bitcoin Anticipated To Hit New All-Time High

Svenson released a YouTube video last week, predicting that BTC’S new all-time high is set for June 2024. Despite the hype surrounding the approval and launch of Spot Bitcoin ETFs, the crypto analyst revealed that Bitcoin has been witnessing significant declines and is currently approaching the critical price level of $40,200. 

The crypto analyst compared Bitcoin’s price movements with the recent stock market patterns. Last Friday, Wall Street stocks, particularly the S&P 500 index, achieved an all-time high of 4,839.81, surpassing its previous record in January 2022. 

Svenson pointed out a significant correlation between Bitcoin and the S&P 500 index in the months leading up to and following the Bitcoin halving. According to the crypto analyst, the last three Bitcoin halvings illustrated a key price pattern for BTC as the stock market hit its all-time high.

The analyst explained that after the first Bitcoin halving in November 2012, the S&P 500 index hit its all-time high, and BTC followed after, recording an all-time high two months later. 

Additionally, in the second halving in July 2016, the S&P 500 index achieved a record high, after which Bitcoin hit an all-time high about seven-and-a-half months later. In the third halving in May 2020, the S&P 500 index broke its all-time high in August, with BTC following suit about four months later.

Svenson has suggested that these results reveal a unique correlation between the price of BTC and the S&P 500 index during the halving phases. Using the average time difference observed in the three halving events, he projected the timeline for Bitcoin’s all-time high in the upcoming halving in April 2024. 

According to the crypto analyst, BTC is expected to achieve a new record high in approximately four-and-a-half months after the S&P 500 index hits its own all-time high. 

BTC Overcomes Critical Price Level

In his video, Svenson disclosed that BTC has successfully bounced off the critical price level of $40,200. He revealed that the cryptocurrency had achieved this feat around the same time the S&P 500 index had recorded its new all-time high. 

“Bitcoin is already bouncing, the weekly is now back in the green, and the daily chart, the daily candle is now also back in the green,” Svenson said.

It’s important to note that at the time of writing, the price of Bitcoin was trading at $40,832, reflecting a 2.06% decline in just 24 hours, according to CoinMarketCap. The crypto analyst warned that if BTC had failed to overcome the critical support level, it could have triggered major bearish signals. 

Svenson also noted that the recent gains in the stock market presented a positive development for both Bitcoin and altcoins in the crypto market. He stated that the stock market’s new all-time high would enable Bitcoin to effectively secure its critical position while also potentially influencing speculator sentiment positively within the crypto space.

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On-chain data shows the Bitcoin Puell Multiple indicator is currently retesting a crucial level that may end up deciding the fate of the latest rally.

Bitcoin Puell Multiple Is Now Retesting Its 365-Day Moving Average

As explained by an analyst in a CryptoQuant Quicktake post, the interaction of the Puell Multiple with its 365-day moving average (MA) can indicate trends in the market.

The “Puell Multiple” refers to an indicator that keeps track of the ratio between the daily revenue of the Bitcoin miners (in USD) and the 365-day MA of the same. The mining revenue here is simply the total amount of coins issued by the network inside a 24-hour span multiplied by the spot price of the coin.

When the value of the Puell Multiple is greater than 1, it means that the miners are currently making a higher income than the average value for the past year. Naturally, when this happens, the motive to sell would rise for these chain validators and thus, the BTC price may be considered overvalued.

On the other hand, values under the mark suggest the cryptocurrency’s price may be becoming undervalued as the miners are now making lower revenues than the 365-day average.

Now, here is a chart that shows the trend in the Bitcoin Puell Multiple, as well as its 365-day MA, over the history of the asset:

As displayed in the above graph, the Bitcoin Puell Multiple had naturally spiked to high levels just earlier when the asset’s price had observed its rally, which had naturally resulted in the block rewards of the miners also shooting up.

As the price of the asset has struggled recently, though, the indicator’s value has come back down and is now retesting its 365-day MA. This line has been relevant historically for the metric, as the quant highlighted in the chart.

Generally, a break above the line has proven to be bullish for the cryptocurrency, while a move under can imply a transition towards a bearish trend. As such, Bitcoin might be standing at a crucial juncture right now, at least from the perspective of this indicator.

Last year, the Puell Multiple also witnessed a similar retest at its 365-day MA, as is apparent in the graph. Back then, the metric had ended up finding support at this important line, and the resulting bounce was what led towards the latest rally in the asset.

It now remains to be seen whether the 365-day MA would act as support this time as well or if the indicator would go through a breakdown. In the latter scenario, the Bitcoin price could end up observing a deeper correction.

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