Two Contradictory Philosophies Jump to Mind When Considering Bitcoin's (BTC) Price Action of Late

By James Van Straten (All times ET unless indicated otherwise)Two contradictory philosophies jump to mind when considering bitcoin's (BTC) price action of late.

output: Two contradictory philosophies jump to mind when considering bitcoin's (BTC) price action of late.

Do you "buy when there is blood in the streets" or perhaps "don't catch a falling knife."?

Which applies in today's market, the day after the largest cryptocurrency posted its steepest three-day decline since the collapse of FTX in 2022? The drop left BTC 25% below January's all-time high, despite the advent of President Donald Trump's pro-crypto administration.

It's no surprise the largest hack in crypto history has shaken investor sentiment. Add to that the memecoin frenzy, which pulled liquidity out of the broader market.

That said, in previous cycles so-called bull-market corrections have seen bitcoin tumbling as much as 35%. Given that BTC hasn't had a meaningful pullback since the yen carry trade unwind last August, the current situation is almost normal.

CoinDesk research showed that bitcoin was trading in an extremely tight range for a meaningful period, and a breakout of the channel was bound to happen. On-chain data tells us that bitcoin recently bounced off its 200-day-moving average or roughly $81,800. While short-term holders are selling — panic sales, perhaps? — at the highest level since August, because they have held BTC for 155 days or less they are usually seen as a signal of some form of capitulation in the market.

BlackRock's IBIT saw record outflows on Wednesday. However, it's not all bad news. A huge expansion deal was made for Core Scientific (CORZ), while MARA Holdings (MARA) reported strong earnings, with both stocks up more than 10% before the open. Meanwhile, NVIDIA (NVDA) beat fourth-quarter estimates to calm investors' nerves. Stay tuned!

What to WatchToken Events

Coinbase (COIN) is set to report fourth-quarter earnings on Thursday. The company's earnings will be closely watched by investors, who will be looking for signs of strength in the cryptocurrency market.

Conferences

The World Economic Forum's Annual Meeting will take place in Davos, Switzerland, from January 18 to 22. The conference will bring together political, business, and academic leaders from around the world to discuss pressing issues facing the global community.

Token Talk

The memecoin frenzy continues, with new tokens emerging on a daily basis. Some of the most popular memecoins include PEPE, SHIB, and DOGECOIN.

Derivatives Positioning

The latest Commitment of Traders report from the Commodity Futures Trading Commission (CFTC) showed that leveraged funds increased their net short position in the S&P 500 futures market in the week ended January 3.

Market Movements:

Bitcoin Stats:

Technical Analysis

Crypto Equities

ETF Flows

Spot BTC ETFs:

The U.S. Securities and Exchange Commission (SEC) has yet to approve any spot bitcoin ETFs, despite the fact that several applications have been pending for over a year.

Spot ETH ETFs

Source: Farside Investors

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