On January 21, the cryptocurrency market experienced a rising wave of selling pressure and in the last hour the price of Bitcoin (BTC) fell below the $ 30,000 mark for the first time since January 4.
Now that Bitcoin has lost support of $ 32,000 and $ 30,000, an increasing number of analysts are suggesting that the price could test the support of $ 24,000 again. A theory behind the decline suggests that institutional investors saw Bitcoin as a crowded trade and decided to make a profit.
As reported by Cointelegraph, Scott Minerd, the investment director at Guggenheim, recently suggested that the price of Bitcoin “probably reached a top” by 2021 and could suffer a “setback to the 20,000 level”.
JPMorgan strategists John Normand and Federico Manicardi also warned that investors using BTC “as a portfolio diversifier are putting themselves at risk”, as Bitcoin is more of a cyclical asset than a hedge.
This note of caution appears to have been timely, given today’s volatility statement. Although liquidations can be painful for investors who are under-leveraged, a more detailed analysis of some of the social activities that occurred during the bearish movement suggests that the current volatility may not be a change in the macro trend.
In private comments with Cointelegraph, TheTIE analyst Erik Saberski noted that during previous Bitcoin price declines “your dominance of market capitalization has not really changed”.
Saberski said:
“This means that earlier this month, settlements were being withdrawn entirely, while recent BTC settlements were moving more towards other cryptocurrencies. Looking at the daily feeling, the same recent falls * usually * have corresponding falls in feeling. We are not seeing this now. “
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The S&P 500 and NASDAQ set new historical records on January 21 and closed up 0.03% and 0.82%, respectively. The Dow Jones also closed the day with a gain of 0.04%.
Of the 100 major currencies, the only project with notable gains was CELO, which gained $ 48.87% and traded at $ 3.37. Ether (ETH) corrected by 21.28% and Polkadot lost 8%.
The overall capitalization of the cryptocurrency market is now $ 871 billion and Bitcoin’s dominance rate is 64.3%.