Bitcoin clings to $42K as key moving average break from July reappears

There are some strong similarities to summer 2021 for Bitcoin currently, while the outlook for Ethereum is bleak, one trader suggests.

Bitcoin (BTC) consolidated above $42,000 prior to Wall Street’s opening bell on Jan. 7 as more similarities to last year’s lows emerged.

BTC “very closely” mimicking May behavior

Data from Cointelegraph Markets Pro and TradingView tracked a nervous Bitcoin market as BTC/USD avoided another retest of $40,000 support.

Earlier, after briefly falling below $41,000, analysts had warned that a further capitulation event may occur, this having the potential to bring the pair down to $30,000 or even lower.

That figure rings true for market participants, having formed the bottom of a protracted capitulation which lasted from May to July last year.

Then, as now, the miner upheaval combined with macroeconomic factors to temporarily take the momentum out of the Bitcoin bull market.

“BTC is following May 2021 very closely,” trader and analyst Rekt Capital noted in a series of tweets on current price action.

He noted that as of Friday, BTC/USD was performing a break of the 50-week exponential moving average (EMA) — just like the mid-July move which formed the bottom of that capitulation phase. The 50-week EMA sat at $45,000 on the day.

The #BTC capitulation event below the blue 50-week EMA is in progress$BTC #Crypto #Bitcoin pic.twitter.com/KGvl2ogbGO

— Rekt Capital (@rektcapital) January 7, 2022

Cointelegraph contributor Michaël van de Poppe meanwhile noted the differences between the two phases.

A “swift correction south” this time around means that prolonged sideways movement and breakout to the upside from 2021 does not overall characterize the current market.

“The $46,000 level remains a very important one to watch. If that one breaks, I think the entire bear market is over or the entire correction is over and we’re looking for upwards potential,” he said during his latest YouTube update.

Ethereum has trader planning $2,200 buy-in

Altcoins also saw trouble on the day, following warnings that any strong moves previously were likely a red flag — a bull trap.

Related: ‘Dip,’ ‘Buy’ and ‘Fed’ top trending topics on social media, per survey

Ether (ETH), the largest altcoin by market cap, traded down 4.5% at the time of writing to near $3,000 — down $700 in a week.

Some in the top ten cryptocurrencies by market cap escaped the downtrend, with Cardano (ADA) up 1.2% at $1.23 and Ripple (XRP) flat.

A still highly cautious Pentoshi identified levels as low as $2,200 for buying ETH, expecting it to hit at “some point this year.”