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(Kitco News) – The cryptocurrency market finally entered correction territory in trading on Monday following several weeks of gains that lifted Bitcoin (BTC) to its highest price since the middle of August and elevated the total crypto market cap back above $1 trillion.
Traditional markets also took a hit as investors anxiously await a busy week of developments that includes the latest Fed meeting, a barrage of heavyweight earnings reports, and jobs data. The S&P, Dow and Nasdaq all finished the day in the red, down 1.3%, 0.71%, and 1.96%, respectively.
Data from TradingView shows that Bitcoin started to come under pressure late on Sunday as bears overwhelmed bulls at the $23,700 support level and managed to drop BTC to a daily low of $22,581 on Monday before bullish reinforcements arrived in an attempt to halt the decline.
BTC/USD 4-hour chart. Source: TradingView
The weakness seen in BTC on Monday was the result of “some mild profit-taking and a downside correction after the market hit a five-month high in overnight action,” according to Kitco senior technical analyst Jim Wyckoff.
So far, the pullback has done little to change the prevailing outlook as “BC bulls have the firm overall near-term technical advantage as a price uptrend is in place on the daily bar chart,” Wyckoff said. “The path of least resistance for prices in the near term remains sideways to higher.”
This view was largely shared by market analyst Crypto Tony, who posted the following Tweet indicating that the upside price target remains at $25,000.
Small sell off today, but market structure remains bullish on the lower time frames so no need to panic right now
$25,000 remains my upside target 👇 pic.twitter.com/7gAw4MuqEM
— Crypto Tony (@CryptoTony__) January 30, 2023
Insight into where Bitcoin needs to close the month of January in order to have a bullish outlook was provided by market analyst Rekt Capital, who posted the following tweet highlighting the importance of support at $23,400.
At this moment, #BTC is forming an upside wick beyond the ~$23400 Monthly resistance (blue)
However the Monthly Close is still a couple of days away and things could change in the meantime
A $BTC Monthly Close above ~$23400 would be bullish#Crypto #Bitcoin https://t.co/9M84m6W7kk pic.twitter.com/8q3l55VwrH
— Rekt Capital (@rektcapital) January 30, 2023
And according to the latest market update from Eight Global, the Fed will largely impact how the crypto market performs in the near future.
“The market has reached the point where things will either get significantly more out of control (and the pump continues), or the Fed will reign in the bulls and bring order back in a way officials have pointed to several times in the past,” Eight Global said. “There still is notable untapped liquidity in the $24,000 – $25,250 area, and if price gets pushed up far enough to get liquidations rolling again, a move into that zone could be quite quick and painful for bears,” the report said.
“Once the market stops stockpiling shorts, we can have more hope for the long awaited correction. Until then, aggressive longs can be sought at $23,500 and the daily 8EMA [exponential moving average], which currently sits at around $23k. The target area remains $24k – $25k, and [stop losses] could be placed at around $22.7k. If the 8EMA is lost as support, it’s time to favor shorts,” the analysts concluded.
Red across the altcoin market
Only a handful of tokens in the top 200 managed to post positive gains in trading on Monday, while most tokens were deep into the red.
Daily cryptocurrency market performance. Source: Coin360
Notable gainers on the day include a 68.84% increase for Everscale (EVER), a 60.3% increase in Voyager Token (VGX), and a 9.11% gain for Injective (INJ)
The overall cryptocurrency market cap now stands at $1.038 trillion, and Bitcoin’s dominance rate is 42.4%.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.