Bitcoin Price Analysis: A Bottom at $42,000 Could Make the Rebound Possible?

Bitcoin’s price tries to stabilize around $42,000, creating a new support level below the previous two. The consequent drop of the price since November 2021 has always happened in levels and our expectations are on the consolidating side.

Bitcoin Price Analysis: Bitcoin / USD, General View

 

Bitcoin Price Analysis for the 07/01/2022 – 10/01/2022 period: Bitcoin’s price tries to stabilize around $42,000, creating a new support level below the previous two. The consequent drop of the price since November 2021 has always happened in levels and our expectations are on the consolidating side. As we can see in the diagram below, the support zones were drawn in new levels that weren’t evident when the price ascended in the last bullish trend.

 

The support zones were formed in descending channels from $60,000 to $54,000 initially and  from $52,000 to $46,000 secondly. The $42,000 level has been seen only once again in the past in late July 2021, when the price was trying to jump above the $40,000 zone but without success.

 

The current situation depicts the 3-way scenario with different probabilities:

 

  • The positive reaction in the market will lead the market to $46,000 point, around the previous support zone. It’s important to highlight that any rebound that will turn the market into a positive trend must have enough momentum to break any resistances in the levels above.
  • The neutral scenario indicates that the $42,000 level will sustain a mild trend around it, proving that there are small expectations for a vast reaction on the bullish side. If there is not a story that will lead the price to higher levels, there are small probabilities for an upside trend in the current situation.
    On the lower side, a bearish trend will confirm the bearish feeling of the market and will return the overall feeling in the past summer, where the price was swinging between $32,000 and $40,000, with minor attempts to break those price levels.
  • The higher possible scenario is the neutral one, as the market will try to calm down the bearish feeling and deliver more stability in the short-term actions. If stability is achieved, then there are probabilities in the mid-term positioning for a bullish rebound, that will bring the price at higher previous levels.

The moving averages have been positioned in a major bearish formation, indicating that there are no signs of a return in the next few days. As stated above, the expectations for projected stability around the $42,000 level will fuel any thoughts for a mid-term growth projection, even at levels above $50,000.

 

The trading volumes were sustained at normal levels for the current period as we can observe several spikes, always correlated with a similar move in the price chart. The correlation between trading volumes and price volatility is always a helpful factor for moving the price on the bullish side.

 

Bitcoin Price Analysis - General View
Bitcoin Price Analysis – General View

Bitcoin / US Dollar – Short-term View

 

In the short-term window of this Bitcoin Price Analysis we can observe that the market was taking major steps every time that a correction happens. On 28 December, the price took a major step down from $50,500 to $48,000, forming the second “Shoulder” in the “Head & Shoulders” pattern, which wasn’t confirmed as a trend change pattern. On 5 January, the price took another major step down, from $46,000 to $43,300 in a single day.

 

Daily losses of 8 -10 % are a normal situation for cryptocurrencies while similar moves in the stock market or other traditional financial markets would act as a major correction and everyone might be panicked and look for alternative solutions to that. Apart from that, Bitcoin has lost almost 40 % of its all-time highest value, and we still consider that we MIGHT be in a bearish situation, meaning that anytime soon, the price could recover at the higher levels.

 

Thus, we are always buying the dip and looking for the long-term…

 

Bitcoin Price Analysis - Short Term View
Bitcoin Price Analysis – Short Term View

Day-Trading View

 

In the day-trading view of the Bitcoin Price Analysis an indicator that brings us several positive results is the cross between the moving averages. The two moving averages are about to cross each other in a bullish formation and there are expectations for a minor jump that will probably last for a few hours. The lack of momentum gives no space in the market for another bullish jump that will last for long.

 

Creating another parallel channel of around $42,000 will create more power in the consolidating move, bringing faster new developments in the Bitcoin market. The consolidating moves are always followed by a breakthrough move on either side. The expectations will be formed from the overall perspective, which is pointed on the bearish side for now.

 

Bitcoin Price Analysis - Day Trading View
Bitcoin Price Analysis – Day Trading View

Indicators

 

MACD index remained in the “red” area but started to grow, for now, indicating that the market will try to get into a more stable position in the next few days. As we stated above, the lack of momentum could be a major problem for the market as there are no other powers that will fuel the market to higher levels.

 

The RSI index bottomed down, below value = 30, indicating that we might have reached a local bottom and the expectations should be on the bullish side. As Bitcoin is considered undervalued in the current situation, some technical and short-term investors might grab the opportunity to place some positions, taking into account that the local bottom could act as a new support level for now.

 

Bitcoin Price Analysis - Indicators
Bitcoin Price Analysis – Indicators

Conclusion – Bitcoin Price Analysis

 

Bitcoin Price Analysis in nutshell: the overall situation in the Bitcoin market is smelling fear as the price continues to drop since the last month. The consequent support breakdowns in the parallel channels boosted the bearish situation and proved that the market depth was not enough in the market to hold those trends.

 

The RSI index shows us that we might have hit a local bottom and the price could turn up and deliver better results over the next days. The stability of this situation will reveal more in the upcoming days, regarding the next moves for the market.

 

Read our previous Price Analysis here!

George Foroglou

George Foroglou

George Foroglou heard first time about Bitcoin in a Christmas dinner in December 2013. As Finance student, he published articles regarding Bitcoin adoption, blockchain applications and IoT monetization strategies. From 2017, he is an active trader in the Bitcoin and other altcoins market, using mostly Technical Analysis. He has worked for plenty web portals, giving insightful articles about technical and fundamental analysis.

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