Bitcoin Bears Back in Control; Is $20,000 BTC Really a Possibility?
Another day, another drop. The Bitcoin market is struggling with bears ever since the new all-time high at $42,000 was hit.
As Denis Vinokourov of Bequant notes, the bias regarding investment remains northbound for Bitcoin but “this does not mean straight line (and) exponential rallies and profit-taking, price discovery and so on, are a natural phenomenon of aggressive price squeeze.”
After last week saw $30k, the level was retested again today. These sellers came from the largest cryptocurrency exchange in the US, Coinbase as seen in its Premium Index, the gap btw BTC/USD pair in Coinbase and BTC/USDT in Binance, which went negative.
“Coinbase whales might want BTC to go lower for consolidation,” noted Ki-Young Ju, the chief executive officer of data provider CryptoQuant.
Interestingly, altcoins are holding pretty well against Bitcoin this time. Bitcoin is actually the biggest loser among the top 17 coins today, as per Messari.
While the bullish camp was displaying signs of mental fatigue, Vinokourov notes the large OI at $52k strike is due to expire this month, and this “ambitious $52k strike-related squeeze will require a spot to trade somewhat higher.”
But how low can the digital asset go this time? While different traders and investors are looking for different levels, the majority is expecting a leg down under $30k. Now that Bitcoin has confirmed a breakdown after 4HR closed below the base of the structure, Ki-Young Ju says the worst case scenario for Bitcoin price is $28k.
However, trader and economist Alex Kruger sees the possibility of dumping to $27,000 in the short term as well.
On the upside, the $37,000 level shows strong on-chain resistance based on the In/Out of the Money Around Price indicator of IntoTheBlock. Approximately 759,000 addresses previously acquired 322k BTC at this level.
#Bitcoin is facing significant resistance ahead.
The In/Out of the Money Around Price (IOMAP) shows a high amount of resistance between $34.05K to $38.04K, where more than 2 million addresses previously acquired 1.05 million $BTC.
— IntoTheBlock (@intotheblock) January 21, 2021
Interestingly, while the crypto market says “The most bullish thing that could happen to BTC is this healthy correction,” Guggenheim’s chief investment officer Scott Minerd is back with bearish calls, in his search for even a bigger buy the dip opportunity.
“I think, for the time being, we probably put in the top for bitcoin for the next year or so. And we're likely to see a full retracement back toward the 20,000 level,” said Guggenheim’ on CNBC’s Closing Bell on Thursday.
“Here's Scott Minerd who insists on trying to talk BTC down so he may buy lower in February when his SEC approval becomes effective. Minerd, rather unintelligently, told the world he thought Bitcoin should be worth $400K before he could buy in full,” commented Kruger on Minerd’s forecasts.
In the meantime, the world’s largest asset manager BlackRock has filed for providing Bitcoin exposure in two funds. Additionally, coins continue to move “off the market to very strong holders, the ones that keep accumulating without selling.”