Bitcoin Bulls Slow Down, BTC/USD May Crater to $30k

The Bitcoin price remains in range mode, capped below $40k with strong sell hints from the weekly chart.

As of writing on Jan 18, Bitcoin is down seven percent week-to-date, stable on the last 24 hours alone. Still, at over $35k, it would appear that buyers are in control from a top-down analysis. However, the short-term trajectory would largely depend on participation.

According to trackers, traders are withdrawing their funds as the participation level is shrinking, driving the average daily trading volumes to $44 billion—or slightly over 1.27 million BTC.

Bitcoin (BTC) Price Overview

At spot rates, the Bitcoin price is in range mode versus the greenback. Clear support and resistance zones are emerging given the price action of the last two weeks.

On the upper end, bulls are struggling below their all-time high of $42k. This zone represents resistance, a liquidation point that could spark FOMO, propelling BTC bulls above $50k or even higher if buyers break in the medium term.

Conversely, a buy zone at the psychological round number $30k is providing support for ambitious sellers.

From price action in the weekly chart, the confirmation of last week’s over-extended bear candlestick may trigger a sell-off.

However, it is dependent on the rapidity of the break below $30k that may see the BTC/USD price crumble back to $20k in a retest.

Ideally, if the sell-off is with above-average trading volumes exceeding those of the first week of January, the odds of a dump will be high. In that case, prices may tumble to $20k, faster like the ascension to $40k.

Bitcoin (BTC) Market Movers

Google Trends data suggest that retail interest in Bitcoin is rising but below 2017 levels. During that time, backed by the ICO hysteria, the BTC price rose to $20k for the first time before contracting to Dec 2018 pits drawing retailers.

People are currently searching twice more for buying Bitcoin than for buying gold. Same trend happened in 2017 but didn't last pic.twitter.com/X42ioFIDZu

— Larry Cermak (@lawmaster) January 17, 2021

At over $35k, the uptick in retail interest is also accompanied by the rising open interest as traders enter, placing positions with low leverage. Analysts pin the recent slump to $30k to the effects of high leverage, which triggered a cascade of sellers in a Domino effect, fast-tracking losses.

People trade $BTC with low leverage, open interest is skyrocketing, and the long-short ratio looks neutral.

Strong on-chain buying signals that have driven this bull market hasn't come up so far. $BTC might retest 30k, so I don't have any position now in this uncertain market. pic.twitter.com/aSsA0M4k6r

— Ki Young Ju 주기영 (@ki_young_ju) January 17, 2021

Even as prices stabilize, on-chain indicators are positive, bullish for Bitcoin. For instance, the hash rate, which tracks prices, is near an all-time high above 150 EH/s suggesting interest in mining despite the reduced incentives.

With the doubling of prices, revenue could still be at pre-halving territory, albeit profits may be lower because of cut-throat competition.

Institutional demand is also on the rise. Grayscale Investments bought an additional 5,132 BTC worth $189 million. This suggests confidence and whales trawling, picking up all BTC from weak hands.

Grayscale buys 5,132 BTC worth $189m over the past 24 hours, which equates to 5.7X of the daily Bitcoin mined. Their total #Bitcoin AUM now sits at $22.3 billion. pic.twitter.com/NpPL8lFHdl

— Bloqport (@Bloqport) January 16, 2021

Bitcoin Price Prediction

The BTC/USD price is bullish in the medium term, but sellers are currently in control. From the daily chart, prices are relatively volatile, with modest volumes pointing to a fractious market.

Therefore, trend traders could be watching for breakouts. A sharp rally above $42k opens up BTC to $50k. Considering how price action has been panning out in the last few weeks, sellers may be in control. Also, with last week’s sell bar, every low—for aggressive traders may be an opportunity to dump with targets at $30k.

A full bar closing below the middle BB (the 20-day moving average) will be indicative of weak bulls. Such a close will be panning out for the first time since October 2020, a hint pointing to sellers.

Losses below $30k will highly spark a liquidation towards $20k in a retest. On the reverse side, gains above Jan 7 bull bar nullifies bears.

Chart courtesy of Trading View

Disclaimer: Opinions expressed are not investment advice. Do your research.