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

Bitcoin is currently trading at around $44,000, and it has moved sideways from earlier in the week. Although the benchmark cryptocurrency could attempt to break these resistance levels, it will likely stay range bound up until $53,000 and $50,000 are reclaimed.

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Bitcoin is trading at $42,341 as of press time. There has been a 3.5% drop in value over the last day.

BTC moves sideways on the 4-hour chart Source: BTCUSD Tradingview

BTC’s price has performed positively after the U.S. Consumer Price Index (CPI) print, a metric used to measure inflation. The order book for Bitcoin had been clear before the publication of the report. It has since been rearranged during the week to form new levels support at $38,000 and $45,000, respectively.

Data from Material Indicators shows an important cluster of bid order below BTC’s price current levels which suggest, at least for the short term, that bulls will continue to defend the $40,000 price mark. These levels are home to bid orders worth more than $20,000,000, as shown below.

BTC’s price (blue line) with important support (bid orders below price) in low timeframes. Source: Material Indicators

Jarvis Labs, an analyst firm, is a good example. believesBitcoin may see some relief in the coming weeks and lower selling pressure. As you can see below, this is supported by a bullish divergence of their 30-Day Bitcoin Returns. When the threshold BTC returns to 0%, it trends upwards.

Source: Jarvis Labs via Twitter

The bounce has been driven mainly by retails investors, according to the firm, as measure by Bitcoin’s Accumulation Trends for the past month. Jarvis Labs also added:

A 30D accumulation trend score shows that the retail sector is confident in its ability to accumulate on the bottoms while the whales seem less inclined. The 7D score indicates the exact same behavior as the December divergence.

Bears Can’t Shake Bitcoin Long Term Holders

Two of Jarvis Labs’ metrics remain in the red, specifically those related to the amount of Bitcoin coins on the move and the amount of BTC compared with the amount of stablecoins in the market. The price of Bitcoin reached $44,000 and this indicates that investors may be selling for a loss while others take profits.

Furthermore, Jarvis Labs was able to determine that long term holders haven’t been shaken by the bearish price action.  Although the average price or realized value of short-term holders dropped to $53,000 from $50,900, this does not pose a risk to relief, and will, according to Jarvis Labs, contribute to future corrections.

NewsBTC reports that Jarvis Labs is waiting to see if there are any changes in the derivatives sector. This will allow BTC’s trend upwards. This time is now with negative funding of futures contracts on Binance and FTX exchanges, as well as most cryptocurrency platforms.

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This could indicate a longer-term rally if the metric moves into negative territory while prices move to the upside. In that sense, Jarvis Labs added the following on Open Interest (OI), the number of total contracts traded across exchanges, and their impact on BTC’s price:

Market cap/open interest has been increasing to match summer highs in 2021. The price is rising now and this indicator is beginning to decline, suggesting that an additional short squeeze may be possible.

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