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Bitcoin may decline to $30,000: why it is possible and what NFTs have to do with it

Bitcoin managed to hold above $41,500 after performing a bearish breakout of $42,000. However, bulls started to give up positions. On January 18, the asset formed a bullish pin bar. This was offset by a decline in buying activity and a further decline in prices during the Asian session.

In general, the situation does not show an aggravation of bearish tendencies or the beginning of the next bottom plunge. Trading volumes are gradually growing against the background of lower volatility and price tightening, which suggests that the price may break out of the narrow range with an impulse move. There are no guarantees that the price can break through the resistance area from below. Following this scenario, bitcoin may test resistance at $42,500, where the mirror level passes, as well as near $44,500. This level represents a large cluster of sell orders and a downtrend line.

Following another scenario, the main support zone is located at $40,500, where the price found the largest buyback. Bulls are staying away until they are sure that there are no significant obstacles in moving towards $45,000-$50,000. This is a positive signal, indicating a consolidation. However, in this paragraph we are considering a negative scenario, so let’s assume that bears manage to break through $40,500 and the price moves towards $40,000. In that case, the BTC/USD pair moves into a narrow range of $40,000-$42,200. The probability of a downside breakout in such a scenario increases significantly, which will subsequently lead to stop-loss orders triggering and mass outflow of positions. Even in this case, the asset is unlikely to fall deeper than $38,000.

According to Invesco investment company, bitcoin may continue to fall to $30,000. According to the experts, the current decline of the cryptocurrency quotes from the high of $69,000 is nothing but the deflation of the bubble formed in the market in 2021. This is highly possible, as we have already seen sharp price declines due to overheating of the futures market. Something similar is happening to the NFT market, with trading volumes on the leading platforms reaching $3 billion. It is likely that in the near future there may be a reassessment of the NFT technology and a drop in demand for it. Since non-fungible tokens are part of the crypto market, bitcoin may be hit by a shockwave, triggering a global outflow of funds from crypto funds. The theory is indeed interesting, but clearly not in the first quarter of 2022.

Bitcoin is likely to spend the first part of Q1 2022 in consolidation and let the altcoin market breathe. While taking this into account, the most likely scenario for further BTC price movement is to hold the price above $40.500. It may allow the asset to form a double bottom and make a reversal with the potential of growth towards $45,000. It may also encourage investors to be more optimistic and to make more purchases. The next month is unlikely to be a breakout month for the flagship cryptocurrency, so most of the attention should be focused on the altcoin market, keeping in mind bitcoin’s impact on the whole industry.

The material has been provided by InstaForex Company –

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