Bitcoin has encountered new resistance

Market overview

The crypto market cap has declined by approximately 10% over the past seven days to $2.36 trillion. Ironically, this appears to be positive news, as it represents a 10% increase from Friday's lows. However, we remain very sceptical about the near future, as the recovery momentum lost steam over the weekend, encountering a sell-off near the $2.4T level. Perhaps we have only seen a bounce on the way down, which is not yet complete.

The sentiment index plunged to 6 over the weekend, repeating the lows of June 18-19 from 2022, and we have only seen this indicator lower on August 22, 2019. By Monday, this indicator had recovered to 14, following the quotes. These are still too low levels for confident purchases. 

Bitcoin grew steadily on Friday after crashing at the very beginning of the day, but since Saturday, it has faced resistance near $71K. There is still a huge supply in the markets from those who want to exit the first cryptocurrency on the rebound. In such conditions, it is worth being prepared for a new test of the 200-week moving average soon.

News background

The fall in Bitcoin prices was accompanied by a reduction in liquidity, a surge in volatility, a decline in risk appetite, and an increase in correlation with stock indices. CryptoQuant admits that BTC could fall to $54,600, where the market could move from a phase of capitulation to a phase of accumulation.

Against the backdrop of the crypto market decline, Strategy's net loss for the fourth quarter was $12.6 billion, according to the company's quarterly report, and its operating loss reached $17.4 billion. Strategy CEO Fong Le assured investors that risks to the company's debt servicing would only arise in the event of an extreme drop in BTC to $8,000.

Cardano founder Charles Hoskinson reported unrealised losses of more than $3 billion. He stressed that he does not intend to liquidate positions, even if the market situation worsens.

Bitcoin miners are massively shutting down their equipment due to mounting losses. The BTC mining profitability indicator has fallen to record lows amid a decline in the crypto market and rising electricity prices. JPMorgan estimates the cost of mining to be around $87K.

As a result of the latest recalculation, the difficulty of mining Bitcoin has plummeted by 11.16% to 125.86 T. This is the most significant drop since 2021, when the Chinese authorities banned cryptocurrency mining.

Despite the current negativity, JPMorgan is optimistic about BTC and predicts that in the long term, the first cryptocurrency could reach $266K. Earlier, the bank raised its long-term forecast for gold to $8,000–8,500.