While Bitcoin is currently struggling to break past the $45K mark, it seems some are losing their trust in the king of crypto and dumping their digital assets fast. Some experts are of the opinion that BTC may not be looking good now and may even fall below the $24K price point. However, they think it will bounce back to reach $100K by the end of 2022 or by first quarter of 2023.
Bitcoin lost its footing above $40,000 once more over the weekend and has been on a downward trend since. This is not a shocking move given that the last two moves into the $40-$44K range had ended the same way. However, this third time has come with a much lower momentum, raising concerns regarding the ability of the digital asset to establish any semblance of support below this level.
No Demand Established
A fall below $40K shortly after breaching it is not unheard of in the history of bitcoin. In fact, given the highly volatile nature of the digital asset, moves like these are expected to occur at intervals. It is one of the characteristics that makes bitcoin such an attractive investment option. However, with the cryptocurrency coming out of a bullish year, moves like these can be important to establish if the digital asset has indeed landed in bear territory.
One of the things that characterize the beginning stages of any bull rally has always been the demand. This comes when investors begin absorbing the available supply on exchanges, leaving less volume for other investors to purchase. Once demand rises above supply, then another rally, or at least a recovery, can begin.
Bitcoin has however failed to establish any type of significant demand following this decline though. This lack of demand moment through one of the highest areas of liquidity, the local golden zone, does not spell good news for the digital asset. With more BTC being dumped on the market and not enough demand to absorb this new supply, bitcoin will deviate entirely from its bullish trend.
BTC has not seen any significant demand | Source: TradingView.com
Why Bitcoin Needs Momentum
The growth of any digital asset and its value depends greatly on the kind of momentum that is being experienced at any particular point. BTC has continued to trade sideways in the past few weeks, an indicator that there has been no real momentum behind all of the recent recoveries. Instead, there has been some bearish divergence building on the larger timeframes.
Related Reading | Why Ethereum May Retest The $2,500 Support Level
Although bitcoin is not entirely out of the bull territory, the bears still maintain a good grip on the market. Following this trend, BTC is gearing to backtest the monthly 21 EMA once again, says an analyst. Since this cannot hold forever, then a breakdown could happen that could see the price of the digital asset crumble to the $20K-$24K level.
BTC low momentum continues to drag price down | Source: BTCUSD on TradingView.com
One important fact to note is how much of the market has moved from short to long. More than 97% of the cumulative market is net long on bitcoin. Inversely, only 2.79% of the cumulative market remains short. So while the long-term outlook for bitcoin remains bullish, the short-term is as bearish as it gets.
Featured image from CoinDesk, chart from TradingView.com
