Bitcoin stuck at $42k resistance level after significant whale liquidations

Bitcoin’s price reached a new all-time high on January 8 when it hit $41,973 a week after surpassing the $30k milestone. It reached the $40k mark on January 7 which immediately dropped to $36k in a few hours. Crypto and chart analysis company Material Indicators report the 10% drop was due to whales liquidating massive amounts of Bitcoin as soon as Bitcoin’s price reached $40k.

The price dip invited more small-time investors and new users to buy more Bitcoins causing its price to quickly rebound past $41k in the next 12 hours. Crypto news and analysis site Cointelegraph reports that whales repeatedly taking profits during new record highs are preventing Bitcoin from surpassing the $42k resistance level.

In two weeks, Bitcoin’s price has surpassed the $30k, $40k and $42k marks. However, the cryptocurrency faced massive rejection both at the $40k and $42k marks. From $42k, it fell to $40k and lower in a few hours. Cointelegraph and Material Indicators report this was most likely due to smaller whales taking profits.

South Korean exchanges saw a massive inflow of Bitcoin from whales, signalling their intent to sell since whales do not hold assets on exchanges. South Korea-based crypto exchange site Bithumb revealed data showing $100 million worth of Bitcoin have been deposited into the exchange. Korbit also revealed a $90 million deposit on January 9.

However, analysts from Cointelegraph remain positive that the bullish trend will continue in 2021 as the purchasing power of the US dollar continues to drop due to oversaturation in the market. Bitcoin’s price has a mutually exclusive relationship with the strength of the US dollar and with continuous printing by the US federal government, reducing the purchasing power of the US dollar, Bitcoin’s position as a hedge strengthens.

Arlington-based news outlet Axios reports on January 8 that the Biden administration plans to release a nationwide tax and infrastructure package worth $3 trillion, as well as $2k stimulus paychecks as part of the government’s aid in the COVID-19 pandemic. Crypto experts in Cointelegraph believe this will further drive the bullish performance of Bitcoin, saying ‘the new tidal wave of stimulus could be another catalyst for Bitcoin as more money floods the market and makes its way into asset prices.’

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