Bitcoin Price Analysis: BTC Continues To Fall After Running Out Of Steam At $40,000
Daily Bitcoin BTC Price Forecast
- The relative strength index has dipped back into the neutral zone.
- The MACD in the 4-hour chart shows increasing bearish momentum.
Bitcoin bulls ran out of steam at the $40,800 level this Saturday. Following that, the price has since plummeted to $36,300, losing nearly $4,500 in valuation. So, is this a temporary correction, or is this the start of a devastating downtrend? Let’s take a look.
BTC Dips Below Key Levels
The premier cryptocurrency has been on the downslide for the last three days. Due to this bearish price action, the relative strength index (RSI) has dipped below 70 for the first time since Christmas.
Image: BTC/USD daily chart
IntoTheBlock’s IOMAP helps us visualize substantial resistance barriers that are holding the price down. As one can see, there are three resistance barriers at $38,500, $39,000, and $40,000. The immediate resistance level is at $38,500; wherein around 350,000 addresses had purchased almost 250,000 BTC.
On the downside, there are two healthy support levels – $35,000 and the 20-day SMA ($32,000). If these two levels don’t hold strong, the price could potentially drop to the 50-day SMA ($24,000), which could be catastrophic.
Image: BTC/USD 4-hour chart
Looking at the 4-hour chart, we can see that the moving average convergence/divergence (MACD) shows increasing bearish market momentum. If the bears do hold strong, they could potentially drop the price to the 200-bar SMA ($26,500).
Number Of New Addresses Drops Sharply
The number of new addresses entering the protocol has dropped drastically from 685,000 on January 7 to 567,000 on January 10. This is a very bearish sign as it shows that the network is weakening.
However, note that the number of new addresses is still higher than before the January 7 spike despite the drop. This could show us that this is a temporary bearish correction.
Elon Musk Wants To Be Paid In Bitcoin
Elon Musk, the CEO of Tesla, recently said that he wouldn’t mind getting paid in Bitcoin. Ben Mezrich, the author of the book “Bitcoin Billionaires,” took to Twitter to note that he would never turn down Bitcoin payments again. Musk responded by agreeing with the author.
Musk had previously said that DOGE was his favourite digital asset. However, he recently admitted that Bitcoin is presently his "safeword" after tweeting the opposite in January last year.
Prior to this, Musk had stated that he would like to have Ethereum (even if it is a scam). Just a few days back, Bitcoin surged to several consecutive all-time highs, finally reaching the $42,000 level.
Bitcoin Volumes On Exchanges Doubled During Rally
Bitcoin, amidst its ongoing bull run, doesn’t appear to be ready to correct just yet. eToro’s Mati Greenspan has recently observed that Bitcoin volumes across exchanges have doubled its previous all-time high.
Bitcoin has doubled in price since December 15, when it first traded above its previous all-time high. Messari founder Ryan Selkis noted that Bitcoin’s doubling time, which measures the speed of parabolic moves, has only been faster twice in 2013 and once in December 2017.
Corrections generally follow these swift doublings of price. More often than not, when the market correction occurs, it will be quick and furious as profits are cleared off the table in preparation for buying back at lower levels.
Key Price Levels To Watch For BTC
The $35,000 psychological level has to hold firm to prevent a drastic drop. If the price breaks below the $35,000 and $30,000 psychological levels, the 200-bar SMA ($26,500) becomes crucial.