On January 9th, Bitcoin’s (BTC) price plummeted to a new low of $91,055, its lowest value since December 1st. This decline raised concerns among market analysts, who predicted that the next psychological support range would remain under $90,000. However, several indicators suggest that BTC may avoid a drop below this level.
Reasons Why Bitcoin May Avoid a Drop Below $90,000
The Crypto Fear & Greed Index Drops to a Three-Month Low
The Crypto Fear & Greed Index dropped from 78 to 50 after the BTC price plummeted by 9% between January 7th and 10th. This significant drop caused the sentiment to shift from ‘greed’ to ‘neutral’. The index has fallen to its lowest value since October 14th.
**Historical Context:**
When the Crypto Fear & Greed Index drops to a neutral or fear zone, BTC prices have historically exhibited a reversal.
Bitcoin Metrics Indicate That the Market Peak Has Not Been Reached
Bitcoin’s failure to hold above $100,000 on January 6th raised bearish concerns. However, from a fundamental point of view, Bitcoin has not triggered any bull market peak indicators.
**Data from CoinGlass:**
The apex crypto asset is yet to retest or surpass its previous market top signals.
Institutional Investors Are Accumulating BTC
While short-term volatility shakes out weak hands in the market, large holders have been actively accumulating Bitcoin since the end of December. Institutional investors have accumulated over 34,000 BTC, worth $3.2 billion, since it dropped below $108,000 on December 17th.
**Comment from Cauê Oliveira:**
Large players took advantage of the consolidation to open TWAP positions, patiently accumulating just below US $95K.
A Window for Accumulation Rather Than a Reason to Panic Sell
MAC.D, a verified CryptoQuant analyst, stated that while short-term investors are experiencing losses, it offers a window for accumulation rather than a reason to panic sell.
**Comment from MAC.D:**
Selling coins at this juncture might prove to be a very unwise decision.
Selling $6.5 Billion in BTC in Six Trading Days May Be Impossible
The rumor surrounding the US government potentially selling over $6.5 billion in BTC has been a key bearish catalyst impacting Bitcoin price. However, crypto commentator Miya highlighted that it might be impossible for the government to execute the sales within six trading days.
**Comment from Miya:**
With President-elect Donald Trump taking office on January 20th, the complexity of selling such high amounts of BTC during an imminent key political event gets more complicated.
Bitcoin Liquidity Pools Are Chasing the Upside
After sweeping the lows below the previous range on the daily chart, Bitcoin liquidity pools are now chasing the upside. Mikybull predicted that a V-shaped recovery would be on the cards.
**Comment from Mikybull:**
A wick below $90,000 for Bitcoin remains possible, but I predict a V-shaped recovery.
In conclusion, while the market has been bearish in recent days, several indicators suggest that BTC may avoid a drop below $90,000. The Crypto Fear & Greed Index dropping to a three-month low is a positive development, and historical data indicates that a reversal is likely when the index falls to a neutral or fear zone. Additionally, institutional investors are accumulating BTC, and selling $6.5 billion in six trading days may be impossible.
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This article is for general information purposes only and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
