Bitcoin stumbles after ETF hype fades, altcoins follow suit
After multiple days of price increases that saw many cryptocurrencies hit two-year highs, the broader crypto market entered into a correction on Friday as traders looked to take profits now that the hype around the launch of the first spot Bitcoin (BTC) ETFs has begun to subside.
Stocks fell under pressure in the afternoon, giving back the gains they saw at the market open, as the latest earnings reports from big banks failed to impress investors. The downside was minimized, however, after the latest Producer Price Index report showed an unexpected decline in prices last month, increasing hopes that inflation will continue to decline, making way for the Federal Reserve to lower interest rates.
At the closing bell, the S&P finished up 0.08%, the Dow lost 0.31%, and the Nasdaq was flat.
Data provided by TradingView shows that Bitcoin bears overpowered bull support at $46,000 near midday and proceeded to pound the top crypto to a low of $43,135, They now look to keep the pressure on as the market heads into the weekend, but bulls aren’t giving up additional ground without a fight.
BTC/USD Chart by TradingView
The loss of momentum was witnessed early on in the futures market, according to Kitco senior technical analyst Jim Wyckoff, who said, “January Bitcoin futures prices [were] a bit weaker in early U.S. trading Friday after hitting another contract high Thursday.”
Bitcoin futures 1-day chart. Source: Kitco
“Bulls still have the solid overall near-term technical advantage amid a price uptrend in place on the daily bar chart,” Wyckoff said. “The uptrend is the bulls’ friend, suggesting more upside in the near term.”
“The Bitcoin ETF is causing Bitcoin’s price to drop from $48,000,” tweeted MN Trading founder Michaël van de Poppe. “Is that bad? No. It’s short-term sell pressure from parties rotating from spot Bitcoin towards an ETF. Long-term, this is absolutely massive and will push Bitcoin to $200k+. Buy the dip.”
In a separate post, Poppe identified the range he thinks BTC will trade in for the foreseeable future and said he thinks altcoins could continue to see gains while Bitcoin consolidates.
#Bitcoin correcting down after the ETF approval and the range seems defined.
In the meantime, while Bitcoin consolidates, I expect altcoins and Ethereum to outperform significantly. pic.twitter.com/vuBGE6pwAy
— Michaël van de Poppe (@CryptoMichNL) January 12, 2024
Altcoin Sherpa pointed to $36,000 as a good entry-level for those looking to long Bitcoin once the correction nears completion.
$BTC: If this indeed was the local top (I’ll say the 1W is looking pretty ugly), 36k probably the region you want to check. Lots of confluence there with some key fib levels, 200D EMA, etc. We’ll see how far down it goes. #Bitcoin pic.twitter.com/ye8xWG1FBm
— Altcoin Sherpa (@AltcoinSherpa) January 12, 2024
And market analyst Rekt Capital said that based on Bitcoin’s price action leading into previous halvings, if it is going to have a major correction, it will occur over the next 30 days.
Historically, Bitcoin tends to perform its Pre-Halving rally ~60 days before the Halving (light blue)
Which means…
If $BTC is going to perform a deeper retrace during its Pre-Halving period (orange), it should occur over the next 30 days or so#BitcoinETF #Bitcoin pic.twitter.com/9mDseEB0uO
— Rekt Capital (@rektcapital) January 12, 2024
Altcoins in the red
Roughly 80 percent of the tokens in the top 200 recorded losses on Friday as the correction was broad and deep, resulting in a 4.72% decline in the total cryptocurrency market cap from the day prior – a decline of $80 billion.
Daily cryptocurrency market performance. Source: Coin360
FTX Token (FTT) was the biggest gainer, with an increase of 18.4%, followed by a 14.6% gain for Helium (HNT), and a 6.6% increase for Worldcoin (WLD). The Solana-based meme token Bonk (BONK) was the biggest loser, with a decline of 15.15%, while THORChain (RUNE) fell 9.87%, and Sei (SEI) sank 9.26%.
The overall cryptocurrency market cap now stands at $1.7 trillion, and Bitcoin’s dominance rate is 50.2%.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
