Here's Why a Bitcoin Trader Says a Drop to $38,000 Is the Worst-Case

The fallout from the Federal Reserve’s recent hawkish comments about raising interest rates as soon as March continued to weigh heavily on cryptocurrency markets on Jan. 6. The Crypto Fear and Greed Index has dropped to 15, with some traders lamenting the start of an extended bear market.

Data from Cointelegraph Markets Pro and TradingView showed bears attempting to challenge the lows set on Jan. 5, which saw Bitcoin’s price drop to $42,439 in early trade on Jan. 6.

Let's take a quick look at where analysts think prices are likely to go in the coming days.

Bitcoin May Bottom Between $38,000 and $40,000

According to Mike Novogratz, chief executive of Galaxy Digital Holdings and a staunch cryptocurrency advocate, the latest drop was “very low volume” and underscored the fact that “there’s a lot of institutional demand on the sidelines.”

As for whether Novogratz thinks the current market conditions are a good buying opportunity, the seasoned trader told CNBC that “he’s waiting a while before buying crypto” and hinted that the market “will be volatile in the coming weeks.” .

Novogratz says:

"Bitcoin may bottom out at $38,000 to $40,000 levels".

BTC Attempts to Establish a Higher Low

Offering a close look at recent BTC price action, crypto analyst and anonymous Twitter user Rekt Capital has posted the following chart, comparing current market conditions to the last time BTC price dropped below its 50-day exponential moving average (EMA) situation was compared.

According to Rekt Capital, BTC “has moved away from where the blue 50 EMA is” and is now attempting to set a new higher low (HL), as indicated by the green dotted line in the chart.

Rekt Capital says:

“BTC also formed a higher low (orange) when diverging below the 50 EMA in May 2021. BTC initially held HL, but below HL is also common.”

According to the circled part provided in the above picture, Rekt Capital believes that BTC may fall to the range of $40,000.

BTC price is in a "pocket of gold"

A final bit of analysis was provided by independent market analyst Scott Melker, who highlighted the critical juncture the market is in, posting the chart below showing BTC trading between the 0.65 and 0.618 Fibonacci retracement levels.

According to Melker, this range is known as the "pocket of gold" and "is considered the most viable place to go long or short an asset and look for a reversal."

Melker said:

“Prices are currently pocketing gold from $28,600 to $69,000.”

At present, the market value of the entire cryptocurrency is 2.077 trillion US dollars, and the dominance rate of Bitcoin is 39.5%.