Bitcoin Reclaims $40K: Can It Maintain the Upside Momentum?

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Bitcoin Reclaims $40K: Can It Maintain the Upside Momentum?
  • Bitcoin bounces back, surging 2.19% to $40K, defying recent bearish sentiment.
  • Analysts warn of BTC’s critical $38K threshold and the potential for a deeper correction to $33K.
  • Fear & Greed Index hit a 100-day low, signaling a cautious market sentiment shift.

Bitcoin (BTC) is currently at a critical juncture, with analysts closely monitoring its price movements. as a potential close below $38,000 on the weekly chart could signify a downturn, targeting a solid support cluster of around $33,000. This development emerges amidst a backdrop of macroeconomic factors and market sentiment, painting a complex picture of the future of this cryptocurrency. 

In the last 24 hours, however, bearish momentum was halted after support at $38,610 was established. At press time, BTC had reclaimed the $40K level, exchanging hands at $40,019.26, a 2.19% surge from the intra-day low.

BTC/USD 24-hour price chart (source: CoinStats)

Bitcoin’s Critical Threshold: $38,000

The significance of the $38,000 level for Bitcoin cannot be overstated. Crypto analyst Ali Martinez has pinpointed this threshold as pivotal. Should Bitcoin’s price close below this on the weekly chart, it could trigger a cascade effect, leading to a further price decline. 

The next crucial support level is approximately $33,000, a zone fortified by several technical factors, including the 0.5 Fibonacci retracement level and the 50-week simple moving average. These elements collectively form a robust barrier, potentially curbing further price slides.

BTC/USD 7-day price chart (source: Alicharts)

Martinez’s analysis goes beyond immediate price levels, delving into historical patterns in past Bitcoin bull cycles. A recurring theme is Bitcoin’s retracement to the 50% Fibonacci level after hitting the 78.6% mark. Drawing parallels with the current scenario, where Bitcoin recently touched the 78.6% Fibonacci level, Martinez suggests a potential correction, aligning the price with the historical pattern of falling to around $32,700.

Market Sentiment and External Factors

The broader market sentiment towards Bitcoin, as indicated by the Crypto Fear & Greed Index, has recently hit a 100-day low. This shift in sentiment is crucial as it reflects investor perception, which is a key driver in cryptocurrency markets. The index, hovering around the ‘Neutral’ range, suggests a balancing act between optimism and caution among investors.

Crypto Fear & Greed Index three months low: source:

Additionally, external factors such as the activities of large Bitcoin holders and developments in Bitcoin ETFs play a significant role. Notably, Grayscale’s transfer of a substantial amount of Bitcoin to Coinbase Prime Deposit and the competition among Bitcoin ETF issuers add complexity to the market dynamics.

Amidst this precarious situation, BitMEX CEO Arthur Hayes has taken a defensive stance. Anticipating a potential drop to the $30,000-$35,000 range, Hayes has acquired $35,000 strike puts for March 2024, highlighting his cautious approach. Hayes, known for his astute market insights, is poised to capitalize on lower prices. He plans to increase positions in specific cryptocurrencies, including Solana and $WIF, should Bitcoin’s price fall below $35,000, as reported by CoinEdition.

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