The Bitcoin exchange rate is being adjusted: what will happen to the crypto market next?

After an inspiring event for investors, the launch of exchange-traded funds for Bitcoin a week ago, a correction began in the market. And she has several real reasons.

Bitcoin

Bitcoin lost about 3.5% of its price over the week. This happened despite the fact that four out of seven trading sessions ended in positive territory. Daily volatility was relatively low:

Source: tradingview.com

The reasons for the negative dynamics of BTC after the approval of spot ETFs by the American Securities and Exchange Commission (SEC) are called by various experts. The information from the Fomo Chain analytical platform looks quite plausible. According to its data, 11,739 bitcoins (worth about $490.5 million) were transferred to the Coinbase crypto exchange. It was after this action that BTC dropped below $42,000. Moreover, the account was quite new. Before transferring cryptocurrency to Coinbase, active purchases were made using it.

Analysts on the Glassnode platform believe that the price decline is due to the unhealthy dynamics of the use of leverage in derivatives, as well as profit-taking by some traders. At the same time, analysts still look forward with optimism: the majority of long-term investors – 55% – are in profit. The last time this was observed was at the beginning of 2022 — right before the collapse of Luna (Terra).

Yes, the launch of spot bitcoin ETFs did not lead to an increase in the value of the largest cryptocurrency by capitalization. But the correlation between BTC and gold has increased. On Friday, January 19, it is 77%, just shy of the all-time record of 79% last seen in October 2023.

Source: longtermtrends.net

From the point of view of technical analysis, Bitcoin is experiencing a correction. This is confirmed by indicators: the RSI value is below 50 and continues to decline, and the price has fallen below the 50-day moving average (indicated in blue). The most likely scenario is the continuation of the trend at least to the support level – $40,181. The implementation of the bullish scenario is possible after breaking through the resistance level of $44,729, which was previously support.

Source: tradingview.com

The fear and greed index has moved into the neutral zone. Compared to a week ago, it dropped by 12 points to 51.

Ethereum

ETH fell in price from January 12 to January 19 by 1.5%. The biggest decline occurred on Sunday, January 14, when the coin immediately lost 4.14%. The second largest cryptocurrency by capitalization has not yet managed to gain a foothold above $2,600, much less $2,700.

Source: tradingview.com

The main news was the deployment of the Dencum update to the Goerli test network, which occurred on January 17. There were some rough spots: finalization was achieved several hours later than planned. The delay was due to a bug in the Prysm client nodes. The implementation of Dencum on Goerli is the first of three phases that will ultimately enable a less expensive way to store information on the main Ethereum blockchain.

And on January 18, it became known that the American regulator postponed the consideration of the application of Fidelity, which wants to launch spot ETFs on ETH, until March 5, 2024. Primary reason for decision = lack of time to evaluate the problems that the new product will introduce. Worth noting: The spot ETF, if approved, would be the first of its kind in the US market.

By the way, interest in ETFs for ether among the general public has reached its maximum both around the world in general and in the USA in particular. In any case, this is exactly the information Google Trends provides..

Source: trends.google.ru

From the perspective of technical analysis, Ethereum, like Bitcoin, is undergoing a correction. However, for ETH it is less pronounced.. This is evidenced by the fact that the price is above both the 50-day moving average (indicated in blue) and the 200-day moving average (indicated in orange).. Support and resistance levels: $2,424 and $2,717.5 (2024 annual high), respectively.

Source: tradingview.com

Polygon

Polygon fell in price by 8.62% from January 12 to January 19, 2024. After the price of the MATIC token jumped to almost $1.1 on January 11, the decline is already more than 28%. Polygon ended five of seven trading sessions in the red, with the drop exceeding 3% in four cases..

Source: tradingview.com

There are several explanations for the negative dynamics.

The first is the occurrence of discrepancies in vesting — unlocking tokens. They were found by the ChainArgos platform. According to the service, there was supposed to be an unlocking that would release up to 1.2 billion tokens. Only the calculated data differed from the real ones: for some reason, 400 million tokens ended up at the Binance 33 address.. However, ChainArgos did not stop and began to dig further. 300 million of those 400 million that ended up on Binance 33 then migrated to 0x2f4Ee. Interestingly, 467 million tokens also arrived there from an address signed “Matic: Marketing & Ecosystem” (MATIC: Marketing and Ecosystem). Thus, the address 0x2f4Ee collected 767 million tokens for a total amount of about $1 billion. In this connection, ChainArgos representatives came to the conclusion: this is not just a coincidence; Polygon and Binance are clearly working together. All this speaks to the opacity of the platform and does not do it good advertising in the eyes of investors.

The second is a more banal placement by the bankrupt credit company Celcius Network of 22.7 million MATIC tokens worth just under $18.8 million on the Binance exchange. After which Polygon fell in price by 4% on January 17 and by 3% on January 18.

But this cryptocurrency also has positive news. On January 17, Polygon founder Sandeep Nailwal announced that the second-tier platform would undergo an update a little later in 2024. One of the main results will be changing the name of the token from MATIC to POL. According to Nailwal, POL will become a multi-chain token with inflation of 1% per year. This will motivate validators and also ensure the growth of the ecosystem.

Technically, with the exception of four days from January 8 to 11, Polygon investors are dominated by bears in 2024. Most likely, the trend will continue in the near future. This is supported by a fall in the RSI indicator below 50. Also, a bearish signal is if the price is below the 50-day moving average (indicated in blue). There will be no need to talk about a change in trend until the resistance level around $1.1 is overcome. The nearest support level is $0.725.

Source: tradingview.com

Conclusion

Thus, the main cryptocurrencies in the week from January 12 to January 19, 2024 unanimously decreased in price. For the most part, this is due to traders taking profits after explosive growth. Well, Ethereum and Polygon continue to prepare for the release of the network update.