Weekly Technical Overview: Bitcoin Battles $40,000 Demand – Hints A Possible Probe to the Downside

2022/01/18 12:04:37

Bitcoin has been on the push to the downside, with the sellers clearly under the control. Beginning the downtrend from the lower timeframes, the picture on the higher time frames is also taking charge shows signs of heading south.

As the market approaches levels of technical support, the hopes for the world’s largest cryptocurrency to take a turn get high. However, the prices fail to keep up with the bullish hope of retail investors.

That being said, the market momentum of the bigger scales still remains intact in the buyer's control, with the down pushes are simply retracements.

BTC Hashrate Crosses 200 EH/s and Sets a New ATH

Bitcoin miners are devoting a large amount of SHA256 processing power to the BTC infrastructure. On January 15, the network achieved its all-time high. The network's hash power is currently running at 199 EH/s at the time of writing.

Bitcoin Mining Difficulty Prepares to Hit Fresh Highs

Bitcoin's mining difficulty is expected to reach an all-time high at the next epoch change, as predicted two weeks ago. In just over 5 days, the next difficulty change is predicted, and projections suggest it will grow 3.83 percent higher than it is presently. Bitcoin's mining difficulty will achieve a new lifetime high if it rises to that level and reaches $25.31 trillion.

In May 2021, the mining difficulty all-time high of 25 trillion was reached, and four difficulty drops, including the greatest epoch decline yet, significantly reduced the difficulty. There have been a total of 12 difficulty spikes and only one difficulty drop since July.

Big Players Are Not Interested in Buying Bitcoin and Ethereum Yet – Head of Genesis Trading

Joshua Lim, head of derivatives Genesis Trading - a top crypto broker, has resorted to Twitter to express his thoughts on the implied volatility characteristics of Bitcoin in recent months. Implied volatility measures the market's perception of the possibility of price movements in a certain asset.

According to the expert opinion, major market players are not interested in buying the world's two largest cryptocurrencies, Bitcoin and Ethereum, because they are trading amid their year-long price ranges - $30,000-$69,000 for Bitcoin and $2,000-$4,600 for Ethereum.

As a result, there is currently no big driver for Bitcoin (BTC) volatility. In less than two months, Bitcoin's implied volatility plummeted from 90 to 70.

Bitcoin Remains Bullish on Weekly Timeframe – Channel Formation in Play

Although the Bitcoin market has been going through some intense selling in the last couple of months, the trend on the bigger picture remains unaffected by the pressure.

The bulls certainly are clear with their plan. During the first retracement in May 2021, the market took a dip all the way down to $30,000. The big bulls accumulated as much as they could, which later took the prices north up to $69,000, to make a new ATH. However, the previous ATH (resistance) failed to hold as support, as the market dipped firmly dipped south $65,000.

The market dipping below the resistance indicates that the BTC is no longer in a trend state. However, the fact remains that the buyers are still in control of the market.

So, the second possibility of the market to take support would be a higher low, to form a bullish channel. And similar possibility could be a range if the prices find demand at $30,000.

As the monthly timeframe is in a massive uptrend, and the momentum of the buyers has always been strong on the weekly timeframe, it is highly likely for the price to take support at a higher price before the official buys resume.

To put it into perspective, the price is currently trading at a demand zone. But based on the price action in this area, the buyers are no longer interested in accumulating. Even the fundamentals agree upon the same.

Bitcoin Price Chart on the Weekly Timeframe | Source: BTC/USDT

The point of interest for the buyers stands at $38,000. Although this price is not essentially a demand, it is structurally the bottom of a bullish channel. It is about the momentum of the sellers that would determine if the market would hold around $38,000.

Ideally, if the market breaches below the current demand and shoots right back up to form a probe on the, as shown, it is highly likely for the buyers to take back charge and potentially make a new ATH.

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