The Dip Continues: Bitcoin on the Verge of Dropping below $40K
by Bogdan Giulvezan
Since the 9th of November 2021, Bitcoin (BTC) has been sliding lower and it is now rapidly approaching the key handle at $40,000. The level acted as good support in the past, and is also a psychological mark, just as all big round numbers.
Can we expect a bullish bounce anytime soon? Well, it looks like Bitcoin whales are confident that it will happen soon. The third-largest BTC whale is on a “buying spree” since November of last year: 1,123 tokens were bought by the entity on November 12, followed by 207 coins on November 16 and a larger buy of 1,647 BTC just a day later. On December 7, the whale accumulated another sizable amount of 2,702 coins, just as BTC price was going above $50,000.
And while most of the Bitcoin community is in a state of panic, the whale in discussion hasn’t been deterred by the dropping price, beginning 2022 with more buys. On January 3, they bought 456 BTC, followed a day later by a new stack of 372 coins. As Bitcoin’s price dropped below $43,000 on January 5th, the whale added 172 coins, totaling their holdings at 121,396.57 BTC.
Bitcoin’s recent slide doesn’t stem from fundamental factors (for example crypto bans in parts of the world or some sort of network failure) and seems mostly triggered by a panic that is spreading across the market. Usually, when the panic ends, the asset becomes appealing again, and that’s when the ones that didn’t panic begin to profit.
Chart Analysis – BTC/USD
Bitcoin is currently trading at $42,000, with an intraday low at $40,900 thus far. The apex cryptocurrency has lost almost 12% during the last 7 days and has recently broken a long-term trend line, which indicates that more downside action will follow.
The next destination appears to be the support at $40,000, a level that was last touched in September of last year. If hit, this level can act as a springboard that will propel price higher. It is important to note that the Relative Strength Index is already touching its oversold level (30), so by the time BTC hits $40K, the indicator will show a stronger oversold condition.
If nothing else, we can expect a bounce higher when $40K is hit but if this results in a move above the steep bearish trend line seen on the chart above, then we might see a stronger recovery. As long as price stays below the two bearish trend lines and below the 50 days MA, the bias is bearish.