Bitcoin (BTC), the leading cryptocurrency in market capitalization, concluded January above the $40,000 mark, indicating favorable price performance. Nevertheless, market analyst Justin Bennett posits that the bottom for Bitcoin has not been reached.
Bennett’s analysis underscores the potential for additional price declines, with the USDT dominance chart of Tether’s stablecoin (USDT.D) suggesting the likelihood of downward movements.
BTC’s Price Faces Concerns as Tether Dominance Signals Worries
Bitcoin’s recent rebound in price, surpassing the $40,000 threshold, has instilled optimism among investors. Despite this, Bennett suggests that additional price drops may occur, potentially following a retest of the mid $44,000 range.
Bennett emphasizes the inverse correlation between Tether dominance and Bitcoin. According to his analysis, the levels on the Tether dominance chart since October have consistently served as reliable indicators for predicting Bitcoin’s price movements.
According to Bennett’s analysis, as illustrated in the provided chart, there is a potential for an increase in Tether’s dominance from its current 6% level, possibly approaching the 8% mark. In such a scenario, Bitcoin’s performance is anticipated to move inversely, signaling potential price declines in the near future.
On January 25, Bennett suggested that Bitcoin might experience another 20% drop from its current levels, bringing it to around $30,000. In the event of this scenario, it becomes crucial for Bitcoin bulls to defend the $30,000 level to uphold the existing bullish structure.
A breach below $29,000 would empower bears, with only three major support lines remaining at $28,400, $25,900, and $24,000 before a potential retest of the $20,000 mark.
Monitoring the resilience of these support levels and Bitcoin’s ability to withstand increased selling pressure will be critical. Additionally, the future market sentiment will play a significant role in determining Bitcoin’s price trajectory.
Bitcoin Observes Impressive Accumulation Trend
Despite the potential for additional price declines, well-known crypto analyst Ali Martinez has highlighted a noteworthy trend in Bitcoin’s recent accumulation pattern by investors.
As per Ali Martinez’s analysis, Bitcoin is undergoing a substantial accumulation streak, comparable to some of the most notable periods witnessed in recent years.
The Accumulation Trend Score, a metric measuring the buying activity of larger entities, has consistently stayed elevated, remaining close to 1 for the past four months.
This implies that influential market participants are actively amassing Bitcoin, signifying their confidence in the cryptocurrency’s long-term potential.
Martinez’s findings further highlight that the price range around $42,560 has become a highly significant area of interest. Within this range, an impressive total of 912,626 BTC has been exchanged. This is anticipated to serve as a substantial support level, potentially preventing further downward movements and encouraging heightened buying interest.
These trends collectively contribute to a positive market outlook, indicating that despite the possibility of price drops, Bitcoin continues to be an appealing asset for long-term investment.