December has been somewhat brutal regarding crypto markets with a prolonged bearish streak that has been devastating for that majority of digital assets. With the exception of a handful of coins, Friday continued the streak of down days as the majority of small, medium, and large-cap coins continued to shed value. Now, several technical trading indicators are flashing warning signs that continued losses might be possible, culminating in Bitcoin dropping to a sub $40k valuation.
By Andrew Senior
December 10th, 2021
Bitcoin has been one of the major drags within the crypto market, losing over 15% of its valuation in the past seven trading sessions, dropping by almost 5% yesterday alone. BTC remains the key indicator of the markets overall health and must show a sustained rally to negate the losses it encountered in December before any talk of a new bull run can begin.
December started off on a painful note when markets took a nosedive on the 4th wiping out more than 14% of the global crypto market cap in less than a day. The fallout was swift with many pundits identifying crypto’s switch from bullish to bearish while walking back their estimates that BTC would end the year with a valuation of $100k plus.
The current sentiment for the year’s end has turned rather bleak with the majority of macro bullish indicators turning bearish. A technical analysis of price movements and trading patterns show the crypto king is currently treading water at a crucial area of support. If BTC experiences a continued sell-off over the coming days it could very well be a sign that a much larger drop into the $30k range is on the horizon.
When analyzing Bitcoin’s futures market, a downtrend becomes more evident. Open Interest has been cut nearly in half when comparing the past two months. In November, the Open Interest generally revolved around $25 billion but dropped to between $13 and $15 billion in December which essentially means traders are closing open positions while others are completely staying away from the crypto markets as a whole. This all amounts to less money flowing into Bitcoin causing further difficulties for any sort of crypto rally anytime soon.
Bitcoin needs bulls to regain the controls if any type of recovery is to take place. If bulls start to push the price up, it could wipe away some of the fears of a prolonged downtrend, yet several warning signs are flashing that the bulls are not doing enough to help BTC breakout of its downward trends. If BTC fails to regain the $50k mark in the next few hours, it could be a sign that a drop to the low $40k range will be up next for the gold standard of cryptocurrencies.
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