The total crypto market capitalization has changed little over the past two days, mostly fluctuating just above the $3 trillion level. The cryptocurrency market remains largely outside the positive dynamics of stocks and metals. This apathy towards the good news of recent months goes hand in hand with complete sympathy when adverse events occur.
If we assume that a bear market does not start with a 20% decline from its peak, but first in the minds of investors, then this change appears to have occurred in October.
Bitcoin continues to attempt to surpass $90,000, a round level that has become a sort of glass ceiling. On the other hand, the general increase in risk appetite in financial markets provides support during intraday declines. On Friday, bulls could be motivated by the desire to lock in some of their bearish positions at the end of the week after a 6% decline since Monday.
Since the start of the week, Ethereum has lost twice as much as Bitcoin – 12% – and is returning to the support zone of November and December. In May and June of last year, there was active resistance from the bears here, which increased the focus on the battle for the current $2,700-$2,900 zone. A victory for the bears at this point could unlock a shocking scenario of a fall to between $1,000 and $1,100, with a 161.8% Fibonacci extension from the August high to the November low.
News context
Recent buyers are taking advantage of short-term Bitcoin rallies to exit their positions, limiting upside potential. The main pressure comes from participants who purchased coins 3-6 months ago for over $110,000, notes Glassnode. Additional pressure is created by a large group of bids above $100,000 formed by long-term holders.
CryptoQuant refers to 2024-2025 as a period of record BTC sales by long-term holders. This indicates a structural rotation of capital from early investors to new participants who focus on price levels, macroeconomics and global liquidity.
The fourth quarter of last year likely marked the end of the bear cycle, Bitwise suggests, comparing the current situation with the first quarter of 2023. At that time, the market was recovering after the collapse of the FTX exchange.
Interest payments on stablecoins do not threaten the banking system, said Circle CEO Jeremy Allaire. He called fears about a possible flight of deposits from banks absolutely absurd.
On January 22, following another recalculation, Bitcoin mining difficulty decreased by 3.28% to 141.67 T. This is the second consecutive decline in the indicator after a 1.2% decline. According to Glassnode, the Bitcoin hash rate, smoothed by a seven-day moving average, is 1.01 ZH/s.
The FxPro analyst team
