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Bitcoin Loses Momentum, Why $40k Is A Key Level For Future Gains


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Bitcoin rejected near $44,000 and has been moving sideways since earlier this week. The crypto-standard could make another attempt to break these resistance levels, but the range is likely to remain restricted until $50,000 and $53,000 are recovered.

Related reading | Bitcoin aiming at $48,000? Bitcoin Reacts Up to US Inflation Report

As of press time, Bitcoin is trading at $42,341 with a 3.5% loss in the past day.

Bitcoin is moving sideways on the 4 hour chart. Source: BTCUSD Tradingview

BTC performed positively after the print of the US Consumer Price Index (CPI), a measure used to measure inflation. Prior to the report’s release, Bitcoin’s order book was clear and rearranged during the week to form new support levels near $38,000 and $40,000.

Data from the Materials Indices shows a significant batch of bid orders below the current BTC price levels which, at least in the short term, indicates that the bulls will continue to defend the $40,000 price mark. As shown below, there are more than $20 million in bid orders around those levels.

Bitcoin BTC BTCUSD CVD MI
BTC price (blue line) with important support (buy orders below price) in lower time frames. Source: Material Indicators

In this sense, Jarvis Labs analyst Believes Bitcoin could see some weeks of rest and less selling pressure. This is supported by a bullish divergence in bitcoin’s 30-day returns, as shown below whenever this metric returns to 0% in BTC trends to the upside.

Bitcoin BTC BTCUSD
Source: Jarvis Labs via Twitter

The bounce was primarily driven by retail investors, according to the company, based on Bitcoin accumulation trends for the past month. Jarvis Labs added:

Results of the accumulation trend based on 30D show that hashrate has confidence in accumulating at bottoms while whales are reluctant to do so. Scores based on 7D indicate the same behavior in contrast to the difference we saw in December.

Bears can’t shake up Bitcoin holders in the long run

Two of Jarvis Labs’ metrics remain in the red, specifically those related to the amount of Bitcoin on the move and the amount of BTC compared to the amount of stablecoins in the market. This indicates that some investors are selling at a loss and others are making profits as the price reached $44,000.

Furthermore, Jarvis Labs was able to determine that long-term holders were unaffected by the downward price action. Short-term holders cut their average or realized price from $53,000 to $50,900, which does not pose an immediate threat to a rebound retracement, but as the company said, will contribute to future corrections.

As NewsBTC reported, Jarvis Labs was waiting for some impact on the derivatives sectors in order for BTC to head higher. It seems that the time has come with passive futures funding on Binance, FTX, and most crypto exchanges.

Related reading | TA: Bitcoin’s Rebound to $42,000, Why Bitcoin Could Recover to $43.5K

If this metric continues to move into negative territory as prices are trending higher, this could point to a more sustainable rally. In this sense, Jarvis Labs added the following on the Open Interest (OI), the number of total contracts traded across exchanges, and its impact on the price of BTC:

Open interest rate/change in market capitalization has risen to match its highs in the summer of 2021. With the rate now starting to rise, this measure is beginning to fall, indicating the possibility of another short squeeze.

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