Here’s why Bitcoin traders say a drop to $38K is the worst case scenario

On Jan. 6, the cryptocurrency market was still heavily affected by the Federal Reserve’s recent hawkish remarks about raising interest rates soon after March. Some traders lament the possibility of a prolonged bear market as Crypto Fear & Greed has been lowered to 15.

Crypto Fear & Greed Index. Source: Alternative

Cointelegraph Markets Pro and TradingView data show that bears tried to challenge the Jan.5 lows, bringing BTC to $42,439 in early trading on January 6.

Daily chart of BTC/USDT Source: TradingView

Let’s have a quick look at what analysts believe the price will go over the next few days.

Bitcoin could drop to $38,000 to $40,000

Mike Novogratz (CEO of Galaxy Digital Holdings) and a strong advocate for cryptocurrency, said that the latest move down was “on low volume” and that it highlighted the fact there is “tremendous institutional demand on the sidelines.”

CNBC asked Novogratz if he sees current market conditions as a buying opportunity. He said that he was still waiting to buy crypto and that the market would “be volatile in the coming weeks.”

Novogratz said,

“Bitcoin could reach a bottom at the $38,000-$40,000 level.”

BTC tries to establish a lower low

Rekt Capital, a crypto analyst and pseudonymous Twitter User, posted this chart comparing current market conditions with those seen when BTC prices fell below their 50-day exponential moving mean (EMA).

BTC/USD 1-week chart. Source: Twitter

Rekt Captial says that BTC has “deviated below 50 EMA blue” and that it is currently trying to establish a new lower low (HL), as indicated by the green dashed lines.

Rekt Capital said,

BTC formed a Higher Low (orange), in May 2021 after it deviated below the 50 EMA. BTC initially held the HL, but it was also common to wick below it.”

Rekt Capital believes that Bitcoin could drop to $40,000 based on the section highlighted in the chart.

Related: Bitcoin price rises to $42K after order book imbalance becomes ‘crazy.

BTC is currently in the “golden wallet”

Scott Melker, an independent market analyst, posted the following chart that shows BTC trading between 0.65 and 0.618 Fibonacci levels.

BTC/USD 1-day chart. Source: Twitter

Melker says that this range is called the “golden pocket” because it “is considered to be the most viable place for too long an asset or short and looks for a reversal.”

Melker stated,

“Price is currently in a golden pocket of the move between $28,600 and $69,000.”

The total cryptocurrency market is now worth $2.077 trillion. Bitcoin’s dominance rate at 39.5% is also impressive.

com. You should do your research before making any investment or trading decision.

https://cointelegraph.com/news/here-s-why-bitcoin-traders-say-a-drop-to-38k-is-the-worst-case-scenario