Bitcoin Sees Poor Demand As Investors Try to Defend $37K, Is BTC In Trouble?

Bitcoin has been rejected as it approached $40,000 and has experienced a rise in volatility during today’s trading session. The first crypto by market cap trades at $37,400 with a 4.3% loss in 24-hours.

Related Reading | Bitcoin Steadies At $37,000, But What Are Options Traders Doing?

BTC trends to the downside in the daily chart. Source: BTCUSD Tradingview

There has been a shift in market sentiment as Bitcoin attempts to bounce from a low near $33,000. A large portion of traders seem to have positioned themselves on the short side.

On crypto exchange Binance, according to Jarvis Labs, funding rates for derivatives turned negative. However, they yet need to reach similar levels as in other downtrends.

BTC Funding rates on Binance turned negative, but far from previous downtrends. Source: Jarvis Labs via Telegram

As the chart shows, funding rates on this platform are barely on negative territory while in June 2021, when Bitcoin hit a yearly low of $28,800, the metric stood higher. This suggests there is room for more downside and more a bigger bearish sentiment across the market.

Bitcoin investors David Ellis has been tracking large BTC holders and their movements for some months. Ellis has found potential for more danger as most of these investors outload their funds with recent BTC price action.

Although there has been some demand for Bitcoin from “Blue Whales”, the overall demand and address distribution seem to be hinting at low interest on the cryptocurrency. Most likely caused by the potential shift in central banks monetary policies, and investors preferring to leave capital on the sidelines. Ellis said:

This is the third straight day of coin consolidation at the top. On the surface, the address contraction is alarming. It could signify broad shrinking interest. My only hope is that some Orca wallets are being combined into BW wallets. Otherwise, we may have a problem.

Coin and Address distribution for Bitcoin in the red suggesting low demand. Source: David P. Ellis via Twitter
Why Bitcoin Could See Some Relief

Further data provided by Material Indicators (MI) suggest Bitcoin could retest its most recent lows as the bidding order below its current levels seems rather thing. Only about $5 million are holding BTC’s current levels, but at the time of writing some buyers attempt to defend $37,000 and prevent a larger decline.

Looks like bids were moved into the #BTC buy zone to defend $37k for now. Still watching #FireCharts. Not sure this game is over yet.https://t.co/zw0ufgPIMt #cryptocurrency #trading #tradingstrategy #tradingsignals pic.twitter.com/t2LPz9N0mh

— Material Indicators (@MI_Algos) February 2, 2022

In favor of the bulls, the U.S. dollar (DXY) has been displaying weakness during the past weeks. The currency was rejected north 97 according to this Index and could continue its downtrend to 94.616.

These levels should operate as critical support for the U.S. dollar and could abate recent selling pressure which could allow Bitcoin to hold its support line and make another attempt into the $40,000s.

$DXY is still coming off. 95.50 is probably next.

A close below 94.60 is required to reverse the trend. https://t.co/H19EgXmOKs pic.twitter.com/B56TVODA3F

— Justin Bennett (@JustinBennettFX) February 2, 2022

Related Reading | TA: Ethereum Breaking This Confluence Resistance Could Spark a Fresh Surge

In addition, as NewsBTC reported, the U.S. Federal Reserve should keep a light schedule for the entire month of February. There are some important events in the next weeks, the report on U.S. Consumer Price Index (CPI), but the institution should remain relatively quiet until March 17th.

Bitcoin has been rejected as it approached $40,000 and has experienced a rise in volatility during today’s trading session. The first crypto by market cap trades at $37,400 with a 4.3% loss in 24-hours.

Related Reading | Bitcoin Steadies At $37,000, But What Are Options Traders Doing?

BTC trends to the downside in the daily chart. Source: BTCUSD Tradingview

There has been a shift in market sentiment as Bitcoin attempts to bounce from a low near $33,000. A large portion of traders seem to have positioned themselves on the short side.

On crypto exchange Binance, according to Jarvis Labs, funding rates for derivatives turned negative. However, they yet need to reach similar levels as in other downtrends.

BTC Funding rates on Binance turned negative, but far from previous downtrends. Source: Jarvis Labs via Telegram

As the chart shows, funding rates on this platform are barely on negative territory while in June 2021, when Bitcoin hit a yearly low of $28,800, the metric stood higher. This suggests there is room for more downside and more a bigger bearish sentiment across the market.

Bitcoin investors David Ellis has been tracking large BTC holders and their movements for some months. Ellis has found potential for more danger as most of these investors outload their funds with recent BTC price action.

Although there has been some demand for Bitcoin from “Blue Whales”, the overall demand and address distribution seem to be hinting at low interest on the cryptocurrency. Most likely caused by the potential shift in central banks monetary policies, and investors preferring to leave capital on the sidelines. Ellis said:

This is the third straight day of coin consolidation at the top. On the surface, the address contraction is alarming. It could signify broad shrinking interest. My only hope is that some Orca wallets are being combined into BW wallets. Otherwise, we may have a problem.

Coin and Address distribution for Bitcoin in the red suggesting low demand. Source: David P. Ellis via Twitter

Further data provided by Material Indicators (MI) suggest Bitcoin could retest its most recent lows as the bidding order below its current levels seems rather thing. Only about $5 million are holding BTC’s current levels, but at the time of writing some buyers attempt to defend $37,000 and prevent a larger decline.

In favor of the bulls, the U.S. dollar (DXY) has been displaying weakness during the past weeks. The currency was rejected north 97 according to this Index and could continue its downtrend to 94.616.

These levels should operate as critical support for the U.S. dollar and could abate recent selling pressure which could allow Bitcoin to hold its support line and make another attempt into the $40,000s.

Related Reading | TA: Ethereum Breaking This Confluence Resistance Could Spark a Fresh Surge

In addition, as NewsBTC reported, the U.S. Federal Reserve should keep a light schedule for the entire month of February. There are some important events in the next weeks, the report on U.S. Consumer Price Index (CPI), but the institution should remain relatively quiet until March 17th.

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