Bitcoin price saw a further sell-off yesterday, falling over 5% intraday to a low of $40,660. Since hitting a yearly high of $49,000 on January 11, the BTC price has fallen by as much as 17%. However, according to renowned crypto analyst Jacob Canfield, this may not be the end of the correction. In a recent one analysisCanfield warned that more downsides could be lurking in the short term.
The analyst, known for his accurate prediction of Bitcoin’s local top, addressed the prevailing uncertainty in the market. “The question everyone is asking now is: where do we go from here?” the analyst stated, acknowledging the community’s growing concern.
A major factor in current market dynamics is the approval of a Bitcoin ETF, which has led to speculation about Grayscale Bitcoin Trust (GBTC) investors selling their holdings to avoid associated fees. The story is further compounded by revelations from court filings that the FTX bankruptcy estate owns a significant number of GBTC shares, approximately 22,280,720 (valued at $744 million), that are about to be liquidated.
Conversely, signs of market optimism are emerging as BlackRock’s ETF, IBIT, is reportedly aggressively accumulating spot Bitcoin, reaching 25,067 Bitcoins in less than a week. The analyst suggests that this buying momentum from BlackRock could ultimately offset GBTC’s selling pressure, especially when you consider the impact of Bitcoin’s upcoming halving, creating a ‘delayed impact’ event that potentially tips the scale on demand for the offer.
How low can the price of Bitcoin fall?
The graph analysis offers a more direct and stark perspective. The Bitcoin 4-hour chart indicates a losing trend that is now acting as resistance, which has historically been an ominous sign for short- to medium-term price movements.
“The 4-hour trend on bitcoin has been lost and tested as resistance. This isn’t great, as the 4-hour trend has historically been a good indicator of short- and medium-term price movements, the analyst noted.
Canfield further points out, “If I was looking for a near-term recovery level, it would probably be around $40,000 liquidity,” indicating possible downward pressure on the price.
Bitcoin’s daily chart shows a narrow path, with significant levels at $48.7k, marked by the 61.8% Fibonacci retracement and weekly resistance, and a notable support level at $38.7k. “As I’ve noted in previous posts, after hitting 61.8, BTC tends to sell off 18-22%, which would also give us another crack at that $38.7k level,” Canfield warns .
Furthermore, the daily 200s (EMA/MA) are currently trending up after previously acting as support, suggesting they could absorb a further price decline.
The analyst concludes with a word of caution, emphasizing the need for vigilance in today’s market characterized by low volume and low volatility, conditions that often precede substantial market movements: “The biggest thing I can emphasize is that caution is recommended during low volume/low volatility. environments that usually require a major step.”
At the time of writing, BTC was trading at $41,178.
Featured image created with DALL·E, chart from TradingView.com
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