The price of Bitcoin (BTC) is showing overall weakness as it struggles to establish USD 34,000 as a support level. Overall, BTC appears to be stagnating with no signs of any short term relief, which is why traders should be cautious.
A worrying trend is that Bitcoin’s volume is stagnating along with its price, aside from the ‘Elon pump’ on January 29. This trend indicates that there has been a general decline in buyer demand since the high of USD 42,000, despite BTC in the low USD 30,000 region.
Bitcoin gets choppy after revisiting USD 38,000
On January 29, Bitcoin’s price soared to $ 38,461 on Binance after Tesla CEO and the world’s richest man, Elon Musk, purportedly showed support for Bitcoin.
Before this meeting, however, analysts on the chain were already warning that Bitcoin’s momentum was slowing.
For example, Ki Young Ju, the CEO of CryptoQuant, pointed out the high selling pressure from Bitcoin miners as a sign of a short-term bearish scenario.
While the price of Bitcoin rose 14% momentarily, it fell to less than $ 34,000 within 24 hours. Therefore, the weakening indicators on the chain were likely a warning that BTC would repeat most of its “Elon Pump” gains.
Ki wrote before the rally:
Exchange Whale Ratio hit its eight-month high, meaning that $ BTC could have a big red candle if the price falls. It should be below 85% if this bull run is legit. Otherwise, it’s probably a bull trap. “
Whales were likely sold when the price of Bitcoin abruptly rose to the USD 38,000 resistance level, triggering a sharp correction.
With shaky indicators on the chain and some selling pressure from miners, traders are also showing caution about short-term BTC / USD cravings.
A pseudonymous trader known as “Salsa Tekila” said he does not use leverage until Bitcoin breaks or falls back to $ 30,000. He said:
“We are at that point where $ BTC is far enough away from the 30k mark to be uncomfortable with any kind of leverage, but at the same time I wouldn’t go short. Hence, it’s best to stay long until a big down / legacy is open / probably Monday morning. NO LEVER “
Meanwhile, another popular pseudonymous trader known as “Byzantine General” claims the rally has been broken. So even if Bitcoin is bullish in the macro picture, more downside is possible until it sees a convincing breakout on lower timeframes. He noted:
“The bull run is still on IMO, but the rally has been broken. If we reclaim the annual TWAP, we can continue pumping, but until then, things are looking pretty meh. “
What you should pay attention to
Traders and technical analysts are closely monitoring Bitcoin’s response to the $ 34,500 to $ 35,000 range.
If Bitcoin breaks out with strength, momentum and high volume, the chances of a short-term trend reversal increase.
However, if Bitcoin struggles to retest the USD 34,500 resistance level and continues to stagnate in the USD 33,000 region, the risk of a further breakdown of the USD 33,000 support remains.
Additional signs that the BTC price could drop again include the Crypto Fear and Greed index remaining at “extreme greed” levels and Google looking for “Bitcoin” which is down 50% since multi-year highs earlier this month.