The New Year has not been very good for the centerpiece, as Bitcoin saw its price drop almost 15% in the first week of 2022. With the top coin still around $ 40,000, speculation has been around. of a new BTC fund have started. area. In fact, some even predict that another free fall will take BTC to the old lower limit of $ 30,000.

Bitcoin’s losses have dragged the larger market into a phase of consolidation, with cryptocurrency market capitalization below $ 2,000 billion. This, after BTC retested the long-term psychological barrier at $ 40,000. BTC’s trajectory appears to have worsened after the asset fell to a new three-month low below $ 41,000.

Notably, most altcoins also appear to be in a tight spot, as overall losses have reached around $ 300 billion in the crypto market.

Lower down on the way?

The main crypto asset has seen lower lows and highs, tracing a long-term downtrend after achieving an ATH in November. Interestingly, BTC was at roughly the same price point a year ago, trading at $ 40,193 on January 9, 2021. A year later, the highest coin only netted + 3.68 % annual return on investment vs. USD. It is therefore safe to say that the royal coin has seen better days.

For now, however, consolidation appeared to be the way forward, as BTC sentiment was “mostly bearish” according to IntoTheBlock data. Nonetheless, despite the largely bearish price action, activity was still shining, as the 7-day change of address was around + 18.08% while the active 7-day change of address was +16. , 91%. This presented a decent image for the network.

That being said, Bitcoin Number of UTXOs in Profit (7d MA) just hit a 5-month low at 107,299,688.137 as BTC fell for the seventh day in a row – the longest streak of price losses since 2018.

Source: Glassnode

With profiting UTXOs registering an all-time low as the broader trend was bearish, there seemed to be still some glittering statistics for BTC.

Supply reduction in manufacturing

Notably, the percentage of the losing Bitcoin supply is now around 33%, approaching the July 21 high of 34%. While from a bullish perspective this would mean that the price is approaching a low before a price reversal, it could also indicate the start of a downtrend.

Source: Crypto Quant

Historically, the percentage of losing supply exceeds 50% during bear market lows.

Additionally, the possibility of a possible short squeeze seems high as Bitcoin’s open interest to market capitalization (OI / MC) ratio hit its highest level in over a year. This short squeeze scenario could fuel further reversal narratives, making the $ 40,000 level an appropriate market low.

Source: IntoTheBlock

The last time the OI / MC ratio rose while the price of Bitcoin fell was in July 2021. This period marked the trough.

For now, testing the crucial $ 45,000 resistance would be the next clue for a decent rise in BTC prices. Until then, with weak network growth, BTC may face further consolidation around the $ 40,000 level. If the $ 40,000 level is breached, the primary asset may revisit the $ 30,000 area in the medium to short term.