Even with the abrupt surge to $42.3K, traders warn that Bitcoin and altcoins are still in for “real pain” if the current macro perspectives remain the same.
Bitcoin (BTC) fell slightly into the Wall Street open on Jan. 11 after the largest cryptocurrency failed to crack resistance above $42,000, but fresh comments from U.S. Federal Reserve chair Jerome Powell appear to be providing a boost to markets.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
Bitcoin squares off at support
According to Powell, the United States is likely to remain in a low-interest environment for some time, a comment that stocks and risk-on assets like cryptocurrencies seem to appreciate.
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD returning to the middle of a narrow range in which it has now spent four days.
“Very simple, Bitcoin is still stuck in a narrow range, in which the $42.8K level couldn’t break,” Cointelegraph contributor Michaël van de Poppe summarized to Twitter followers.
“Overall, we’re facing support right now, which has to hold to avoid any market breakdowns.”
Even with the current push to $43,100, the mood among traders remains cautious even with bullish on-chain indicators persisting and open interest sparking hopes of an upside “short squeeze.”
Crypto Fear & Greed Index. Source: Alternative.me
Commenting on derivatives order book action on Jan.10, Decentrader co-founder, filbfilb, said that it was too early to reduce caution.
“Big bid fills on Binance, FTX and Bitfinex and a wicky daily candle. So maybe some relief for a bit, but I’m a bear until things materially change,” he told subscribers of his Telegram trading channel.
Real pain “yet to come” on altcoins
Equally precarious, fellow trader Pentoshi argued that altcoins were apt to form of bull trap by ticking higher before resuming their own downtrend.
Like filbfilb and others, Pentoshi has maintained a cool perspective on Bitcoin, and has even adopted a bearish view extending through 2022 thanks to the macro climate.
“A lot of these alts look like they have a little bounce incoming to suck people in before a nasty leg down. Many retesting areas they already bounced off after forming parabolic rises but have huge areas below where supports were never built,” he warned Twitter followers Tuesday.
“The real pain is yet to come.”
Pentoshi highlighted Solana (SOL), which he said he would be interested in buying only at vastly reduced levels between $50 and $80.
SOL/USD traded at $140 at the time of writing, while largest altcoin Ethereum (ETH) reclaimed $3,200 as Bitcoin rose.
ETH/USD 1-hour candle chart (Bitstamp). Source: TradingView