Analysts warn that Bitcoin could dip to $38K 'before an eventual breakout'
The cryptocurrency market faced another day of weakness on Jan. 18 as the price of Bitcoin (BTC) dropped lower and additional pressure was also put on the altcoin market. Currently, the crypto Fear and Greed Index registered "Extreme Fear" among investors and some traders caution that BTC price could soon fall below its recent $39,000 swing low.
Data from Cointelegraph Markets Pro and TradingView shows that bulls lost control of the $42,000 support level during the early trading hours on Tuesday as bears hammered the BTC price to a daily low of $41,250.
Many crypto holders who were disappointed by the lack of a blow-off top to close out 2021 also expecting fireworks to start 2022, but historically speaking, January “has been one of the most disappointing months for BTC” according to a recent report from Delphi Digital.
Delphi Digital pointed to “a slowdown in global liquidity growth and tighter policy expectations” as the primary source of headwinds for Bitcoin and they highlighted that these factors have also led to weakness in the stock market, which is considered to be strongly correlated with the price movements seen in BTC.
Another source of weakness identified by Delphi Digital was a lack of liquidity in the perpetual and futures markets along with a drop in BTC open interest over the past two months.
Delphi Digital said,
As for what comes next, Delphi Ditial indicated that “short-term momentum indicators appear to signal the worst may be behind us” and the analyst noted that the Fear & Greed index is at levels not seen since May 2021.
Related: Bitcoin hodlers ‘under siege’ at $42K as 30% of BTC supply flips from profit to loss
A similar trend of weakness was addressed by crypto market intelligence firm Decentrader,
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