The crypto correction deepened on Monday as Bitcoin (BTC) briefly slipped below $40,000 in the afternoon amid a reshuffling of holdings by ETF providers, with Grayscale’s Bitcoin Trust continuing to see outflows as traders take profits and rotate into other products that charge lower fees.
Stocks traded in the green throughout the trading day, although they gave back some of their earlier gains during the afternoon trading session, as investors brushed aside concerns about higher-for-longer interest rates.
The S&P hit a new record high in the morning and finished up 0.22% at the closing bell, while the Dow gained 0.36%, and the Nasdaq climbed 0.32%.
Data provided by TradingView shows that Bitcoin fell under pressure at the opening of the Monday candle, sliding lower throughout the trading day and hitting a low of $39,385 in the afternoon. At the time of writing, bulls have managed to push it back to $39,995, a decrease of 4.3% on the 24-hour chart.
BTC/USD Chart by TradingView
Despite the slide below $40,000, “Bulls still have the overall near-term technical advantage but have faded and need to show some strength soon, to avoid more serious chart damage,” warned Kitco senior technical analyst Jim Wyckoff.
Bitcoin futures 1-day chart. Source: Kitco
“January Bitcoin futures prices [were] weaker in early U.S. trading Monday, after hitting a six-week low last Friday,” Wyckoff said. “A price uptrend on the daily bar chart has stalled out. The bears still have momentum on their side.”
While some are seeing the pullback for Bitcoin as a sign of greater weakness, market analyst Rekt Capital helped provide a little perspective by looking at how the top crypto performed in previous lead-ups to a halving.
“At this same point in the cycle of approximately 84 days before the Halving, Bitcoin had retraced: 16% in 2016 and 63% in 2020,” as compared to the “18% [pullback] thus far in 2024,” he tweeted. “It's clear that at this point in the cycle, a pre-halving retracement tends to occur.”
“When BTC rallies strongly - investors think of the best-case scenario for BTC's price,” which leads to “Bullish euphoria,” he added. “When BTC retraces strongly - investors think of the worst-case scenario for price,” leading to “Bearish euphoria.”
“The truth lies somewhere in between these extremes,” he concluded.
According to MN Trading founder Michaël van de Poppe, Monday’s pullback has put Bitcoin in a good range for accumulation.
#Bitcoin is at the range low and is actually in the area to be accumulated.
Additionally, this also means that #Altcoins are in stages to be bought as those 20-40% dips are a great opportunity. pic.twitter.com/sJqtZOlBA0— Michaël van de Poppe (@CryptoMichNL) January 22, 2024
But Doctor Profit warned that the market could see another leg down as traders have not yet reached optimum bearishness.
Cant see big fear in the markets currently so I say more downside
Everyone saying otherwise has absolutely no idea what he is talking about. Buying the dip should become unprofitable, retails sell in loss.
Once big fear is reached breakout above 48k will happen in few candles— Doctor Profit ?? (@DrProfitCrypto) January 22, 2024
No shelter for altcoins
Altcoins were plunged deep into the red on Monday, with only six tokens in the top 200 recording a gain for the day.
Daily cryptocurrency market performance. Source: Coin360
Axelar (AXL) led the gainers with an increase of 10.2%, while Huobi Token (HT) climbed 9%, and Siacoin (SC) climbed 4.6%. dogwifhat (WIF) was the biggest loser, falling by 18.2%, followed by a 16% loss for Ribbon Finance (RBN), and a 12.6% decline for Pendle (PENDLE).
The overall cryptocurrency market cap now stands at $1.57 trillion, and Bitcoin’s dominance rate is 49.9%.
