After a day of intensifying sell pressure, Bitcoin price dropped below $29,000 for the first time since January 5.
On Jan. 21 the cryptocurrency market experienced an increased wave of selling pressure and within the last hour Bitcoin (BTC) price dropped below the $30,000 mark for the first time since Jan. 4.
Now that Bitcoin has lost the $32,000 and $30,000 support, a growing number of analysts are suggesting that the price could retest the $24,000 support. One theory behind the dip suggests that institutional investors viewed Bitcoin as a crowded trade and decided to take profits.
As reported by Cointelegraph, Scott Minerd, the Guggenheim’s chief investment officer, recently suggested that the price of Bitcoin has “likely put in a top” for 2021 and could see a “retracement back toward the 20,000 level.”
JPMorgan strategists John Normand and Federico Manicardi also warned that investors using BTC “as a portfolio diversifier are putting themselves at risk” as Bitcoin is more of a cyclical asset than a hedge.
This note of caution seems to have been well timed given today’s show of volatility. Although sell-offs can be painful for investors who are overleverged, taking a closer look at some of the social activity that occurred during the downside move hints that the current volatility might not be a macro trend change.
In private comments with Cointelegraph, TheTIE analyst Erik Saberski noted that during previous dips in Bitcoin price “its market cap dominance did not really change.”
“This implies that earlier in the month, sell-offs were cashing out entirely, while recent BTC sell-offs are moving more into other cryptos. Looking at daily sentiment, the same recent drops *usually* have corresponding drops in sentiment. We aren’t seeing that right now though.”
Stimulus hopes keep stocks near all-time highs
The traditional markets continue to be boosted by the prospect of a wide-ranging stimulus package from the Biden administration.
The S&P 500 and NASDAQ both etched new all-time highs on Jan. 21 and closed up by 0.03% and 0.82% respectively. The Dow also closed the day with a 0.04% gain.
Out of the top-100 coins, the only project with notable gains was CELO, which gained $48.87% and trades at $3.37. Ether (ETH) corrected by 21.28% and Polkadot lost 8%.
The overall cryptocurrency market cap now stands at $871 billion and Bitcoin’s dominance rate is 64.3%.