Is the weakness of Bitcoin after the ‘Elon Musk pump’ hinting at a bull trap?


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The value of Bitcoin (BTC) is exhibiting total weak point because it struggles to determine $34,000 as a assist degree. General, BTC seems to be stagnating with out indicators of a short-term aid rally, main merchants to be cautious.

One regarding development is that the quantity of Bitcoin has been stagnating together with its worth, other than the “Elon pump” on Jan. 29. This development signifies that there’s an total drop in purchaser demand for the reason that $42,000 high regardless of BTC hovering within the low $30,000 area.

BTC/USDT 4-hour worth chart (Binance). Supply:

Bitcoin will get uneven after revisiting $38,000

On Jan. 29, the worth of Bitcoin rose to as excessive as $38,461 on Binance after Tesla CEO and the world’s richest man, Elon Musk, ostensibly confirmed assist for Bitcoin.

Nonetheless, earlier than this rally, on-chain analysts have been already warning that the momentum of Bitcoin was slowing.

Ki Younger Ju, the CEO of CryptoQuant, for instance, pinpointed the excessive promoting stress from Bitcoin miners as an indication of a short-term bearish situation.

Though the worth of Bitcoin briefly surged 14%, it snapped back down to sub-$34,000 inside 24 hours. Therefore, weakening on-chain indicators have been probably a warning that BTC would retrace most of its “Elon pump” positive aspects. 

Ki wrote earlier than the rally:

“Alternate Whale Ratio hit the eight-month excessive, that means $BTC may need a big crimson candle if the worth drops. It is imagined to be beneath 85% if this bull-run is legit. In any other case, it is more likely to be a bull lure.”

Whales probably bought as the worth of Bitcoin abruptly surged to the $38,000 resistance degree, inflicting a pointy correction.

With shaky on-chain indicators and a few promoting stress coming from miners, merchants are additionally exhibiting warning about longing BTC/USD within the close to time period. 

A pseudonymous dealer often known as “Salsa Tekila” stated that he’s not utilizing leverage till Bitcoin breaks out or drops again to $30,000. He said:

“We’re at that time the place $BTC is much sufficient from the 30k for me to not be snug longing with any type of leverage however on the similar time I would not brief. Due to this fact being spot lengthy till a giant down / legacy open / in all probability Monday morning is finest. NO LEVERAGE”

In the meantime, one other well-liked pseudonymous dealer often known as “Byzantine Basic” argues that the rally is damaged. Therefore, even when Bitcoin is bullish within the macro image, extra draw back is feasible till it sees a convincing breakout on decrease time frames. He noted:

“The bull run remains to be on IMO, however the rally is damaged. If we re-claim the yearly TWAP we are able to proceed ze pump, however till then it seems kinda meh.”

Bitcoin worth chart with TWAP degree. Supply:, Byzantine Basic

What to be careful for

Merchants and technical analysts are intently observing Bitcoin’s response to the $34,500 to $35,000 vary.

If Bitcoin breaks out of it with power, momentum, and excessive quantity, then the chance of a short-term development reversal rises.

Nonetheless, if Bitcoin struggles to retest the $34,500 resistance degree and continues to stagnate within the $33,000 area, the chance of an additional breakdown to the $33,000 assist stays.

Crypto Worry and Inexperienced Index (78 or “excessive greed”). Supply: Digital Property Knowledge 

Further indicators that BTC worth might see one other pullback embody the Crypto Worry and Greed index remaining at “excessive greed” ranges and Google searches for “Bitcoin” dropping by 50% since multi-year highs seen earlier this month.