Image by: Jamie Street – Unsplash
Bitcoin price saw a bearish move over the weekend and appears poised to retest critical support levels. The downward price movement was triggered by a surge in selling pressure following the approval of Bitcoin spot exchange-traded funds (ETFs) in the US.
As of this writing, Bitcoin price is trading at $40,900, with a loss of 2% in the last 24 hours. In the last week, these losses have doubled, with other assets in the top 10 cryptocurrency markets underperforming, with the exception of Dogecoin (DOGE), which still posted a 4% gain over the same period.
BTC price is trending upwards on the daily chart. Source: BTCUSDT on Tradingview
Bitcoin price is losing momentum, how low can BTC fall?
Via the social media platform X, founder and former CEO of crypto exchange BitMEX, Arthur Hayes, shared a Bitcoin price prediction. According to Hayes, BTC appears to be on the verge of losing its current levels.
The crypto founder and trader claims that short-term price action will likely push Bitcoin below $40,000 and potentially $35,000 if bulls fail to defend the higher area around these levels.
The main problem regarding the current market structure lies in the liquidity in the Bitcoin market. As seen in the chart below and as pointed out by Hayes, liquidity in the BTC market has been trending downward since the Bitcoin spot ETF was approved.
As a result, and due to the constant selling pressure of the Grayscale Bitcoin Trust (GBTC), the market has been trending lower and may maintain this trajectory until the next major macroeconomic event.
The BitMEX founder explained:
Why did $SPX and $BTC stop rising together after the launch of the US BTC ETF? Both are love more $liq, which one is right about the future? $BTC tells us that there will be a liquidity shortage. The next signpost is the US Treasury refund announcement (announcement) on January 31st.
The BTC market is experiencing a drop in liquidity, which is affecting price developments. Source: Arthur Hayes on X
If Bitcoin goes lower, what levels could hold the limit?
A pseudonymous crypto analyst in a separate report highlighted a series of buy orders ranging from $38,819 to $40,000. In other words, these levels should represent resistance and appear as the biggest opportunity for BTC to recover, at least in short time frames.
With this in mind, the analyst explained the following by anticipating a possible short-term recovery and showing the following picture:
Some large zones begin to build up around 41,000 and 42,000 kilometers. I'm pretty sure we'll at least take the top out somewhere next week. Let's see if the price remains stable after that.
The BTC chart shows a stack of bid liquidity around $38,800 to $40,000. Source: DaanCrypto on X
Cover image from Unsplash, chart from Tradingview
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