The weekend turned red in the Bitcoin market as the price plummeted at $35,000, bringing back memories from the summer of 2021. The summer of 2021 was a period of stagnation for the Bitcoin market as the price was swinging between $32,000 and $40,000, creating a stable position that was sourced into the new bullish wave.
The bullish and the bearish cycle have made the process last from 3 months each. The bullish cycle started from August 2021 and topped in November 2021 (3 months period) while the bearish cycle started from November 2021 and finished now in January 2022 (another 3 months). The market seems to be more solid than the previous bearish period in May 2021, as there were multiple support zones before the price found a local bottom around $35,000.
As you can observe in the diagram below, in May 2021, the fall from $60,000 to $35,000 happened in just a week, cold-showering many investors and delivering regrets to novice traders in the crypto market. This time, things were more prepared and the market created 4 support zones, that enabled the market to smooth the transition between the bullish and the bearish phase. The created market depth will be useful for future use in similar situations.
The price was consolidated around the $35,000 average during the last period, and this remains the main scenario regarding price development in the current phase. So, we expect that the next weeks or months will be stable enough to form another price wall or range, making the next market move wait patiently for the right time.
Some analysts predict that the current price situation will be a “hibernation” as the market will sleep calmly until the next major fundamental story comes up and make the price skyrocket again to new high levels. This move could be disrupted, if only there is a sudden move in the market, either on the bearish or the bullish side, the trend could take another form and there would be a need for separate analysis based on the next scenario. As we mentioned above, the expectations lay on the stability zone and more will come in the next days. Of course, the boundaries at $40,000 (in the high end) and $32,000 (on the lower end) will be our marks for this period.
The moving averages are placed in a bearish positioning, indicating that the market has still held a negative feeling about the price development and how it will evolve in the next period.
The trading volumes made a strong spike during the sell-off day, indicating that there were massive liquidations in the Bitcoin market, correlated possibly with the liquidations in the traditional markets’ spectrum, where similar corrections happened during the last week.
In the short-term diagram of the Bitcoin Price Analysis, we can observe that the parallel channels were confirmed in this positioning as a major move is always following a minor or major consolidation period. The positive fact in this movement was that the market stopped at $35,000, which was the major support point for the entire market during the last bearish turn.
On the other hand, the fact that the market couldn’t stop the downtrend before the $35,000 point, would be a positive signal for the turnaround. As we have mentioned in previous articles, a stop in the bearish trend before the price reaches the previous bottom levels would mean that the market would be ready for a new all-time high level in the next bullish phase.
As this didn’t happen, we can only make predictions about what will happen in the next period after the consolidation. The length of the consolidation will also become a major factor in the next trend establishment. The next period is going to be a heated period for every investor.
The previous days were the best days for short-sellers as there was enough volatility in the market to be exploited towards the bearish side. If the market continues to make minor moves around the $36,000 point, the day-traders will need to find more approaches to take profitable positions during the day for Bitcoin.
Otherwise, they could turn to altcoin markets where the correlations and the volatility have remained at high levels. The only factor that could stand against this move (moving to altcoin markets) is the liquidity. Bitcoin has the largest liquidity pool from every other cryptocurrency and every action can be matched immediately. This is rarer for the altcoin markets and many investors are distracted from that.
MACD (Moving Average Convergence Divergence) index has turned fully “red”, indicating that there is no momentum in the market that could change the trend at this point. This index follows the major trend and it matches the short-term expectations of investors. Right now, the bearish moves are stronger so we don’t have to expect something different.
The RSI (Relative Strength Index) index has plummeted between values 20 – 25, showing that the market is a “buy” for now. This could be a mid-term strategy based on the index’s predictions and should be accompanied by more analysis.
The Bitcoin market has officially finished the bearish cycle, entering the previous support zone, which will probably lead into another consolidation phase. The expectations are leading investors’ thoughts into new areas, proving that there are ups and downs in the market for more exploration.
The next period will reveal more and more insights that will help to find the optimal strategic positioning for trading options.
Read our previous Bitcoin Price Analysises here!
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