Bitcoin Could Dip to $38k Before Bullish Breakout, Analysts Warn

The crypto market fear and greed index are at extreme among investors as Bitcoin continues with the price struggle from the last quarter of 2021. Experts and analysts hint that the pioneer coin might plunge below the $38k mark before any rally. The crypto industry, in general, has been facing somewhat bitter experiences recently as the price of BTC keeps dropping lower below the support level price.

Following BTC’s price drop^[1], altcoins have also been under pressure. Bitcoin could sink below its last swing low of $39500 if bear pressure continues. This may also trigger a massive ‘bloodbath’ in the crypto market as investors begin pulling out to save what is left of their money.

According to data on TradingView, the bulls have lost control of the $42k support level as the bears keep pushing the prices lower and lower. At writing, BTC is trading at $41.5k. 

Is January the Weak Month for Bitcoin?

It looks like January is still weak for Bitcoin, even as many crypto holders continue experiencing disappointment. Historically, January has been one of the significant determinant months in the crypto market. However, the lack of the blow-off top to the close of 2021 and spilling it on to January shows that more fireworks are on the way in 2022.

According to Delphi Digital, global liquidity growth might slow, and tighter policies are expected. BTC headwinds highlight that these factors will also lead to weakness in the stock market, considering that they strongly correlate with the BTC price movements.

Data Source: Tradingview.com 

Another weakness highlighted on BTC is the lack of liquidity in the futures markets, which have opened interest over the past two months along with BTC price drop. Delphi Digital mentions that the price is contracting and steaming from liquidity issues for the most part. 

These issues are triggering liquidations exacerbating BTC’s initial price weakness. However, there is an indication that a short-term bull momentum will appear signally and that the worst may be behind us.

Will Bitcoin Dip Under $38k Level or Hold at $40.7k?

The crypto market intelligence Decentrader addresses the most common trend of weakness in BTC. Decentrader shows that the number of the investors buying the dip and the traders have received a challenge at $41k. Furthermore, the analysts suggest that there could eventually be an upside move outcome based on the size and consistency of the BTC drawdown in the past two months.

According to Decentrader, the price might be moving on the upside towards the 200-day Exponential moving average to about $50000. However, a different range between $44k and $38k is inevitable before the breakout.

Currently, the general crypto market stands at $1.976 trillion, and the dominance rate for BTC has gone down to 40%. It looks like 2022 is not clear for the bull rally. Nevertheless, short-term volatility is inevitable, and new all-time highs can be possible in 2022.

Ironically for BTC, the $40.7k level was in focus in 2021 January. Later it ushered in more phases of the BTC bull rally, reaching an all-time high at the $69.1k mark. The same level was also of focus in September 2021 after the crash caused by China burning crypto in the country and other key significant figures in the market pulling out.

The focus is still on the same level as the BTC price lingers near $41.3k. Could this be a turning point for the bull rally in 2022 or an ultimate fall below the mark? This level is pivotal support to watch out for.

* We hope this information will help you in your investment process, but this is not investment advice. Every investment carries risk, especially in this industry, so DYOR before making a decision.