After the long-awaited spot Bitcoin ETF approval, price action for investors did not go as expected. The price of Bitcoin (BTC) experienced a decline that brought the price below the $40,000 threshold. And it could be just the beginning.
A weekly chart closing below the $38,000 level could indicate a possible downturn for Bitcoin, with the focus on the robust support cluster at around $33,000.
This critical area includes several technical components, including the lower boundary of a parallel channel, the 0.5 Fibonacci retracement level, and the 50-week simple moving average, according to a Jan. 24 post by cryptocurrency analyst Ali Martinez on X
Possible further lows for BTC. Source: Ali Martinez
The convergence of these factors forms a notable line of defense that has the potential to prevent further declines in the price of first-party cryptocurrencies.
Historical movement as a possible prediction
Historical price movements could be a good indicator for investors as they may be able to replicate the same pattern as after previous notable events.
In December 2017, BTC experienced a surge in value in anticipation of the start of Bitcoin futures trading, only to subsequently suffer an 84% correction. A parallel event occurred in October 2021, when the flagship crypto experienced an uptrend ahead of the Bitcoin futures ETF approval, leading to a subsequent correction of 78%, according to a Jan. 23 post by investor Charlie Bilello .
Historical price movement of BTC after notable events. Source: Charlie Bilello
A similar pattern emerged in January 2024 as the price rose ahead of the approval of the first spot Bitcoin ETF, although with a more moderate correction of 20% so far.
Could whales be responsible for the correction?
Addresses that hold large amounts of specific digital assets (so-called whales) can directly impact the price of the cryptocurrency based on their trading movements.
The latest data suggests notable activity among cryptocurrency whales across different holding classes. According to a Jan. 20 post by crypto educator Wise Advice, wallets with values between $100,000 and $10 million have seen a 3% decline over the past six months, while wallets with values between $10,000 and $10 million have seen a decline since August recorded a decline of 4%.
Whales BTC sales activity between wallets of different sizes. Source: Smart Advice
Interestingly, wallets holding 10,000 to 10 million BTC remain at their lowest levels since June 2023, indicating a possible selling or distribution trend by these holders.
Bitcoin price analysis
At press time, BTC was trading at $39,926, having gained 1.25% the previous day, in contrast to losses of -6.52% last week and a decline of -8.50% last Month.
BTC 24 hour price chart. Source: Finbold
Technical indicators paint a contrasting picture: the overall rating is “Neutral” at 7 and the moving averages are sloping toward “Sell” at 9. Meanwhile, at 4, the oscillators are moving towards “buy”.
Technical analysis of BTC price. Source: TradingView
With historical data, trading sentiment and price analysis all against Bitcoin, further declines are likely, which could provide investors with an opportunity as an entry point.
Disclaimer: The content of this website should not be considered investment advice. Investing is speculative. When you invest, your capital is at risk.
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