On January 13, the crypto market initiated an intense sell-off as the Bitcoin price fell below the $3,500 mark.
The weakness in the short-term price trend of BTC led the market to demonstrate volatility on the downside. More than $5 billion was wiped out of the crypto market and major assets like Ethereum recorded a six percent drop.
Generally, both analysts and traders expect Bitcoin to fall to the low $3,000 region in the days to come. Some have suggested that a strong buy wall below the $3,000 mark may allow the dominant cryptocurrency to recover, implying that a 10 percent fall remains a possibility.
In the short-term, Cred, a cryptocurrency technical analyst, said that BTC could test the $3,430 support level first. Depending on the movement of the asset at $3,430, the asset could initiate a corrective rally or continue a steep drop to low $3,000.
“I am interested in the $3,430 level. It’s the HTF (M1/W1/D1) low that price blew through without a retest,” the analyst said.
Hsaka, a cryptocurrency trader, echoed the sentiment of Cred, adding:
“$3,430 is the next level of interest for me on the daily. Won’t be blindly punting a long there, but will watch for PA to develop on the LTFs.”
In the last 12 hours, the daily volume of the cryptocurrency market has recovered from around $13 billion to $16 billion, by 23 percent.
The volume of Bitcoin has increased from $4 billion to $5.1 billion, demonstrating a fairly large jump in trading activity in a short period of time. The resistance in the $3,400 to $3,500 range may prevent an abrupt fall by a large margin in the upcoming days.
On January 13, when the volume of Bitcoin was hovering at just over $4 billion, analysts expressed concerns in regard to the lack of sell pressure on the market.
Often, if the price of an asset falls substantially on the day, the volume spikes as sell orders are filed across major exchanges. However, on Sunday, Bitcoin recorded a three percent drop with low volume, essentially free falling without high sell-pressure.
The growing volume of the cryptocurrency market could alleviate some of the pressure major crypto assets have faced on the day.
While cryptocurrencies are not likely to experience a large downward movement in the next 24 to 48 hours, the market still remains gloomy.
As Bitcoin failed to break out of $3,600, Hsaka said that previous lows are likely to be retested, in the $3,400 region.
“Clear rejection on LTFs. Confluent with a HTF S/R flip. Retest of the previous low (white level) seems likely to me,” the trader said.
Most of the worst performing cryptocurrencies in the past 24 hours have been tokens and low market cap cryptocurrencies, and small digital assets are expected to perform poorly in the short-term.
Featured Image from Shutterstock. Price Charts from TradingView.
Last modified: May 20, 2020 12:58 PM UTC