Plunge

Long

Bitcoin

Grayscale Bitcoin Trust

James

The crypto market is witnessing a notable downturn, with Bitcoin’s price plummeting below the $39,000 threshold. Bitfinex’s latest <a href="https://blog.bitfinex.com/wp-content/uploads/2024/01/Bitfinex-Alpha-88.pdf" target="_blank" rel="noopener nofollow">Alpha Report</a> paints a bearish picture, suggesting that the prevailing market sentiment is inclined toward further downturns. 
This perspective is based on analyzing critical price levels that could support BTC’s falling value. 
<h2 id="further-plunge-ahead">Further Plunge Ahead?</h2> 
The ongoing decline in Bitcoin’s value, as highlighted by Bitfinex, has caused a significant reduction in short-term holder profits and raised concerns about increased selling pressure from this <a href="https://bitcoinist.com/jim-cramer-cautious-on-bitcoin-and-etf/" target="_blank" rel="noopener ">group of investors</a>. 
<img loading="lazy" decoding="async" class="wp-image-276487 size-large" src="https://bitcoinist.com/wp-content/uploads/2024/01/Screenshot-2024-01-23-at-15.02.23.png?resize=980%2C570" alt="Long term Holders and Short term Holder profitability." width="980" height="570" srcset="https://bitcoinist.com/wp-content/uploads/2024/01/Screenshot-2024-01-23-at-15.02.23.png?w=2284 2284w, https://bitcoinist.com/wp-content/uploads/2024/01/Screenshot-2024-01-23-at-15.02.23.png?w=640 640w, https://bitcoinist.com/wp-content/uploads/2024/01/Screenshot-2024-01-23-at-15.02.23.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2024/01/Screenshot-2024-01-23-at-15.02.23.png?w=980 980w, https://bitcoinist.com/wp-content/uploads/2024/01/Screenshot-2024-01-23-at-15.02.23.png?w=1536 1536w, https://bitcoinist.com/wp-content/uploads/2024/01/Screenshot-2024-01-23-at-15.02.23.png?w=2048 2048w, https://bitcoinist.com/wp-content/uploads/2024/01/Screenshot-2024-01-23-at-15.02.23.png?w=750 750w, https://bitcoinist.com/wp-content/uploads/2024/01/Screenshot-2024-01-23-at-15.02.23.png?w=1140 1140w" sizes="(max-width: 980px) 100vw, 980px" data-recalc-dims="1"> 
Analysts from Bitfinex emphasize that this trend could potentially lead to “further substantial price correction,” in the Bitcoin market. Short-term holders, known for their sensitivity to market movements, could trigger further price dips, with critical support levels identified at “$38,000 and $36,000.” 
According to the report, this range closely aligns with the realized price of <a href="https://bitcoinist.com/bitcoin-paradigm-btc-surpasses-traditional-finance/" target="_blank" rel="noopener ">BTC</a> for short-term holders, currently at $38,307. The analysis also revealed that over half of the profits accumulated by short-term BTC holders have been erased, leading many, especially recent buyers, to <a href="https://bitcoinist.com/crypto-fund-exodus-bitcoin-etfs-attract-inflows/" target="_blank" rel="noopener ">exit the market at a loss</a>. 
Speaking of loss, in just 24 hours, BTC’s price has sharply fallen, <a href="https://bitcoinist.com/bitcoin-price-crashed-below-40000/" target="_blank" rel="noopener ">dropping from above $41,000</a> to approximately $38,908 at the time of writing, losing over $2000 in value. 
<img loading="lazy" decoding="async" src="https://www.tradingview.com/x/8GkdcuYd/" alt="Bitcoin (BTC) price chart on TradingView" width="2770" height="1556"> 
This decline of 4.6% in a day affected the asset’s value and led to substantial liquidations in the crypto market. <a href="https://www.coinglass.com/LiquidationData" target="_blank" rel="noopener nofollow">Data</a> from Coinglass indicates that over 123,000 traders have been liquidated in the past 24 hours, with cumulative liquidations amounting to $325 million. 
BTC long traders bore the brunt of these liquidations, incurring losses of around $80.35 million. Ethereum traders have also felt the ripple effects, with significant liquidations experienced among long and short traders. Long traders faced liquidations totaling $63.46 million, while short traders saw $6.48 million in liquidations. 
<h2 id="reasons-behind-bitcoin-market-downturn">Reasons Behind Bitcoin Market Downturn</h2> 
The BTC market downturn has been attributed to various factors, including the continuous outflows from the <a href="https://bitcoinist.com/ftx-sheds-nearly-1-billion-in-grayscale-bitcoin-etf/" target="_blank" rel="noopener ">Grayscale Bitcoin Trust (GBTC)</a>. Bloomberg analyst James Seyffart <a href="https://x.com/JSeyff/status/1749634659145630055?s=20" target="_blank" rel="noopener nofollow">commented</a> on the gravity of the situation, noting that GBTC experienced its largest outflow yet, totaling $640 million in a single day. 
<blockquote class="twitter-tweet"> 
 Woof. BAD day for <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="noopener nofollow">#Bitcoin</a> ETFs overall in the Cointucky Derby. <a href="https://twitter.com/search?q=%24GBTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw" target="_blank" rel="noopener nofollow">$GBTC</a> saw over $640 million flow out today. Outflows aren’t slowing — they’re picking up. This is the largest outflow yet for GBTC. Total out so far is $3.45 Billion. (Don’t have BlackRock data yet) <a href="https://t.co/jNOyiTADVq" target="_blank" rel="noopener nofollow">pic.twitter.com/jNOyiTADVq</a> 
 — James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1749634659145630055?ref_src=twsrc%5Etfw" target="_blank" rel="noopener nofollow">January 23, 2024</a>
</blockquote> 
Another critical factor influencing Bitcoin’s <a href="https://www.newsbtc.com/news/bitcoin/bitcoin-price-drops-sub-39000-key-reasons/" target="_blank" rel="noopener nofollow">dip below $39,000</a> is the reduced activity in futures and options markets. Notably, the open interest in CME Bitcoin futures significantly <a href="https://x.com/StackerSatoshi/status/1748883879182930277?s=20" target="_blank" rel="noopener nofollow">declined</a>, indicating a decrease in market leverage and speculative interest. 
<blockquote class="twitter-tweet"> 
 CME <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="noopener nofollow">#Bitcoin</a> futures open interest has dropped by over $1.64 billion following the spot BTC ETF approvals <a href="https://t.co/3DBv4p3ezq" target="_blank" rel="noopener nofollow">pic.twitter.com/3DBv4p3ezq</a> 
 — Satoshi Stacker (@StackerSatoshi) <a href="https://twitter.com/StackerSatoshi/status/1748883879182930277?ref_src=twsrc%5Etfw" target="_blank" rel="noopener nofollow">January 21, 2024</a>
</blockquote> 
Crypto analyst Skew <a href="https://x.com/52kskew/status/1749577118189789688?s=20" target="_blank" rel="noopener nofollow">provided</a> insight into the dynamics between Bitcoin’s perpetual futures and spot markets. Skew observed a dominance of short positions in the perpetual futures market, suggesting a bearish sentiment. 
The analyst also noted the lack of volatility and urgency in the current market, attributing it to decreased open interest and a focus on spot market flows. 
<blockquote class="twitter-tweet"> 
 <a href="https://twitter.com/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw" rel="nofollow noopener" target="_blank">$BTC</a> Binance / Bybit Open Interest &amp; Delta Nothing too conclusive yet in perps market other than shorts becoming the dominant position in the market currently 
 Perp premiums often occurring during periods of spot limit selling into price 
 Spot premiums notably when perps push… <a href="https://t.co/PdZtfIQK5U" target="_blank" rel="noopener nofollow">pic.twitter.com/PdZtfIQK5U</a> 
 — Skew Δ (@52kskew) <a href="https://twitter.com/52kskew/status/1749577118189789688?ref_src=twsrc%5Etfw" target="_blank" rel="noopener nofollow">January 22, 2024</a>
</blockquote> 
Featured image from Unsplash, Chart from TradingView

Bitcoin Plunges Below $39,000: A Breaking Point For Deeper Crash?

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