Introduction
On January 9th, Bitcoin’s (BTC) price dropped to a new range low at $91,055, its lowest value since December 1. This development has led some market analysts to forecast a decline below the psychological support range of $90,000. However, there are four reasons that suggest BTC might avoid this drop.
Reason #1: Crypto Fear & Greed Index Drops to Three-Month Low
The Crypto Fear & Greed Index dropped to 50 from a high of 78 after the BTC price dropped 9% between January 7th and 10th. This index, which tracks broad market sentiment, fell to its lowest value since October 14.
| Date | Crypto Fear & Greed Index |
| — | — |
| Jan 10 | 50 (drop from 78) |
| Oct 14 | 50 (previous low) |
This recent plunge is the biggest drop over the past few years and has caused the sentiment to shift from ‘greed’ to ‘neutral.’ Historically, BTC prices have exhibited a reversal whenever the index has dropped to a neutral or fear zone.
Reason #2: Bitcoin Metrics Indicate "Market Peak" Is Not In Yet
Bitcoin raised bearish concerns after it failed to hold a position above $100,000 on January 6th. However, from a fundamental point of view, Bitcoin hasn’t triggered any bull market peak indicators.
Data from CoinGlass highlighted that the apex crypto asset is yet to retest or surpass its previous market top signals. The bull market peak indicators consist of 30 conditions varying between charts and indexes, but none of the metrics tapped previous bull market highs from 2017 and 2021.
| Condition | Status |
| — | — |
| MACD (12, 26) | Not triggered |
| RSI (14) | Not triggered |
| Bollinger Bands | Not triggered |
Mikybull, a crypto analyst, implied that these price dips remain an ‘opportunity’ before the expected rally.
Reason #3: Bitcoin Whales Bought 34,000 BTC After the End of the Year
While short-term volatility is shaking out weak hands in the market, large holders have been actively accumulating Bitcoin since the end of December. Cauê Oliveira, head of research at Blocktrends, mentioned that institutional investors have accumulated over 34,000 BTC, worth $3.2 billion, since it dropped below $108,000 on Dec. 17.
| Date | Accumulated BTC |
| — | — |
| Dec 17 | 34,000 (worth $3.2B) |
Oliveira added: "Large players took advantage of the consolidation to open TWAP positions, patiently accumulating just below US $95K."
This implied that institutional demand remained high despite BTC’s recent sell-off below $100,000.
Reason #4: Selling $6.5 Billion in BTC in Six Trading Days Seems "Impossible"
One of the key bearish catalysts impacting Bitcoin price over the past two days has been the rumor surrounding the US government potentially selling over $6.5 billion in BTC. In light of this, crypto commentator Miya said it might be ‘impossible’ for the government to execute the sales within six trading days.
| Trading Days | BTC Sales |
| — | — |
| Jan 9-15 | $6.5B |
With President-elect Donald Trump taking office on January 20th, Miyahighlighted the complexity of selling such high amounts of BTC during an imminent key political event. The issue gets more complicated because Trump said he plans to establish a Bitcoin reserve, which means it will potentially be a topic of discussion during his official appointment.
In short, the crypto enthusiast argued that a reversal is more than likely for Bitcoin since the market has already priced in the bearish speculation.
Conclusion
While some market analysts are forecasting a decline below $90,000, there are four reasons that suggest BTC might avoid this drop. The Crypto Fear & Greed Index dropped to three-month low, indicating a neutral or fear zone, which historically leads to price reversals. Bitcoin metrics indicate that the "market peak" is not in yet, as none of the bull market peak indicators have been triggered. Institutional investors have accumulated over 34,000 BTC since the end of December, and selling $6.5 billion in BTC in six trading days seems ‘impossible.’
Overall, these four reasons suggest that a reversal might be on the cards for Bitcoin.
Sources
- CoinGlass
- Blocktrends
- Cauê Oliveira (Blocktrends)
- Miya (crypto commentator)
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
