After a day of intensifying selling pressure, the Bitcoin price fell below $29,000 for the first time since January 5.
On January 21, the cryptocurrency market experienced a growing wave of selling pressure and in the last hour the Bitcoin (BTC) price fell below the $30,000 mark for the first time since January 4.
Now that Bitcoin has lost the $32,000 and $30,000 support, a growing number of analysts suggest that the price could test the $24,000 support. One of the theories behind the drop suggests that institutional investors saw Cryptosoft as a saturated trade and decided to take profits.
As reported by Cointelegraph, Scott Minerd, chief investment officer at Guggenheim, recently suggested that the Bitcoin price has „probably capped out“ by 2021 and could register a „pullback toward the $20,000 level.“
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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 cautionary note seems to have been very timely given today’s volatility show. While the sell-off may be painful for investors who are overleveraged, a closer examination of some of the social activity that occurred during the move lower suggests that today’s volatility may not be a macro trend reversal.
In private comments with Cointelegraph, TheTIE analyst Erik Saberski indicated that during Bitcoin’s previous price declines „its market cap dominance didn’t really change.“
„This implies that at the beginning of the month, sales were pulling back completely, while recent BTC sales are moving more towards other cryptocurrencies. If we look at daily sentiment, the same recent drops *usually* have corresponding drops in sentiment. However, we’re not seeing that right now.“
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BTC price vs. daily sentiment score.
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Traditional markets remain buoyed by the prospect of a broad stimulus package from the Biden administration.
The S&P 500 and NASDAQ set new all-time highs on January 21, closing up 0.03% and 0.82%, respectively. The Dow also closed the day with a gain of 0.04%.
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Daily performance of the cryptocurrency market. Source: Coin360
Of the top 100 coins, the only project with notable gains was CELO, which gained 48.87% and trades at $3.37. Ether (ETH) corrected 21.28% and Polkadot lost 8%.
The global cryptocurrency market capitalization now stands at $871 billion and Bitcoin’s dominance rate is 64.3%.