Price Analysis

Bitcoin Price Bounce from $30k, Crypto Volumes Drop 50% in 2 Weeks

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1 month ago

January 28, 2021

Dalmas

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The Bitcoin price is firm but remains under pressure after cracking on Jan 27.

As of writing on Jan 28, the BTC price is stable versus the greenback, losing eight percent in the last week of trading.

Traders are optimistic despite strong sellers. Encouragingly, there is a spike in trading volumes, rising 18 percent to over $67 billion.

Bitcoin (BTC) Price Overview

The BTC price is in the immediate term bearish, sliding versus a resurgent greenback as analysts are convinced of a peaking market.

At spot rates, the BTC/USD price is changing hands at $30.75k. A break below $30k could spark a sell-off in a FUD.

This is because $30k is a psychological buy wall and a round number, closely watched by traders possibly looking to either add to their longs or exit their positions, further heaping pressure on the digital gold.

On the flip side, if bulls flow back and stem the slide, the immediate sell wall is the resistance trend line and $35k. These levels could support BTC bulls only if trading volumes continue to swell.

In this case, it would mean the past week’s degradation in BTC prices was climactic, without whales participating, and purely retail.

Bitcoin (BTC) Market Movers

For buy trend continuation, there must be a sharp price recovery from the current multi-week lows of around $30k.

Losses below this level, printing in combination with high bearish volumes, could see prices slide in what could be the beginning of the last few month’s rally.

Already, analysts note an across-the-board reduction in volumes. In two weeks, crypto trading volumes fell nearly 50 percent.

Volumes are tanking really badly across the board. Now down about 50% from the peak two weeks ago pic.twitter.com/ITUxZbuCLJ

— Larry Cermak (@lawmaster) January 27, 2021

This could suggest a possible exit of retailers as BTC/USD peak or whales playing the waiting game. As seen, the Spent Output Profit Ratio (SOPR) is at overbought levels, according to GlassNode data.

#Bitcoin Entity-Adjusted SOPR chart by @glassnode keeps me up at night.

The last 3 times the SOPR rose close to or higher than 1.20, $BTC went through an 80% corrective period. Recently, this on-chain metric peaked at a high of 1.24, which is the highest value ever recorded. 😱 pic.twitter.com/CxSJq4dfPJ

— Ali Martinez (@satoshilatino) January 26, 2021

Nonetheless, on-chain statistics point to a possible accumulation. For instance, hash rate (a metric directly influenced by prices) is steady at near all-time highs.

My feed is filled with FUD on #Bitcoin topping and the repeat of the 2017 top scenario.

Well, on-chain data begs to differ.

Here's what illiquid supply dynamics looked like at the former top and what it paints now.

HODLers were selling then but they're accumulating this time. pic.twitter.com/eA6g91tNaG

— Lex Moskovski (@mskvsk) January 26, 2021

Also, the outflows from exchanges are being traced to HODLers. Different from 2017 peaks, there appear to be more buyers than sellers.

If I had to pick a single $BTC chart to track daily, my all-time favourite would be the Illiquid Supply Change chart.

It tracks inflows and outflows of bitcoin to hodler addresses.

As you can see it's at ATH the last two weeks.

We're in huge consolidation. pic.twitter.com/2jmPooadPz

— Lex Moskovski (@mskvsk) January 23, 2021

Bitcoin Price Prediction

The BTC/USD price is, at the moment, bearish even with bulls flowing back in the Asian session.

On the last day, as aforementioned, BTC remains stable versus the USD, losing eight percent week-to-date.

Technically, the market is cooling off after the tear of the last few months.

Notably, Jan 27 bear bar is a confirmation of the bear break out pattern of Jan 21. That was the first time a full bear bar closed below the 20-day moving average (middle BB), confirming the three-bar bear reversal pattern from Jan 7 to 11.

Following these developments, the path of least resistance is southwards. Accordingly, the odds of a break below $30k (the 38.2 percent Fibonacci level of Sep to Jan 2021 high) is high.

A break below this mark could provide an opportunity for aggressive traders to sell the pullbacks targeting $25.5k, the 50 percent Fibonacci retracement level.