The start of the new year has been turbulent for Bitcoin USD, with the price plummeting 6% to reach below $96,000 over the past 24 hours, but indicators are now showing rising demand.
The drop is one of the biggest daily drops in recent weeks, as traders and investors attempt to figure out why that would be. While briefly passing the $100,000 threshold earlier, Bitcoin has been unable to maintain its momentum, and sell-offs and bearish sentiment have taken over in the market.
The cryptocurrency market as a whole has been on edge, with Bitcoin’s decline dragging other major assets lower.
For example, Ethereum has also seen a sharp pullback. Overall, the crypto market cap is down about 6%. Analysts said macroeconomic fears and higher-level profit-taking are the main culprits driving Bitcoin’s struggles.
Coinbase Premium Index Turns Positive
Amid Bitcoin’s price volatility, the Coinbase Bitcoin USD Premium Index has positive readings for the first time since December 17, suggesting U.S. investors are once again hankering for Bitcoin.
The Coinbase Premium Index looks at the difference between the price of Bitcoin USD on Coinbase, a U.S.-focused exchange, and a worldwide exchange like Binance. A positive premium means demand is elevated from buyers in the U.S.
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It’s worth noting this due to the recent bearish market trend. The positive premium indicates that U.S. investors foresee the $95,000 price level as an opportunity to purchase the rally as market sentiment is down in general.
In previous downturns, the Coinbase Premium Index has tended to move before those same downtrends reversed, so this will be one signal to keep an eye on in the trading days ahead.
The Coinbase Premium Index chart features a visible open space in the red to green territory, showing increasing demand. Such a negative correlation can be a stabilizing factor for Bitcoin as U.S. institutions and retail investors come back from the holiday lull.
Bitcoin USD Technical Analysis and Market Outlook
From a technical analysis perspective, Bitcoin USD failed to break through that critical resistance level of $102,000. This has been a big problem in the past few weeks, as there have been several rejections and bearish momentum.
While Bitcoin currently retreats below $100,000, the next key support level is $94,000. A deeper correction should be avoided if Bitcoin can hold that level back.
As a momentum indicator, the Awesome Oscillator (AO) has given a very sharp negative reading, indicating a massive blowoff in selling pressure. This is in keeping with the broader downtrend seen in late price action.
Yet there is no unanimity in the market outlook. At the psychological level of $100,000, it is crucial resistance to reclaim, but a reclaim will be a strong bullish signal. A downside break below $94,000 could lead to more losses, with $90,000 becoming the next key support.
