Bitcoin continues to struggle below $42,000 as extreme fear grips the crypto market and analysts point to a drop to $38,000.

The crypto market has yet another day of weakness ahead of it as bitcoin prices fall and additional pressure is put on the altcoin market as well. Currently, the Crypto Fear & Greed Index has reached levels of “extreme fear,” prompting some investors and traders to warn that the bitcoin price could soon fall below its recent low of $39,000.

Cryptocurrency Fear & Greed Index | Source: Alternate

Data from TradingView shows that bulls lost control of the $42,000 support on Jan. 18 as bears pushed Bitcoin to an intraday low of $41,250.

BTC/USDT daily frame price chart | Source: TradingView

History shows a weak January for Bitcoin

Many crypto owners, disappointed by the lack of a blow-off top by the end of 2021, also expect the boom to start in 2022, but historically January is “one of the few ‘most disappointing’ months for Bitcoin,” according to a recent report by Delphi Digital.

BTC/USD has normalized year-to-date | Source: Delphi Digital

Delphi Digital has pointed to “a slowdown in global liquidity growth and tightening policy expectations” as the main source of headwinds for Bitcoin, and they emphasize that these factors are also leading to stock market weakness, which is believed to be closely correlated with the price movements seen in Bitcoin .

Another weakness identified by Delphi Digital is the lack of liquidity in the futures and futures markets along with the decline in Bitcoin’s open interest (OI) over the past two months.

“The price drop was caused in large part by liquidity issues in the futures market, which sparked a series of liquidations that exacerbated initial price weakness.”

As for next, Delphi Ditial points out that “short-term momentum indicators appear to be signaling that the worst may be behind us,” and the analyst notes that the Fear & Greed Index is at levels seen since May 2021 was no longer achieved.

Bitcoin could fall below $38,000

A similar bearish trend has been pointed out by crypto market research firm Decentrader, which found that the number of traders “buying the dip” was challenged at $41,000.

Analysts are suggesting that based on the size and consistency of Bitcoin’s price declines over the past two months, a range-bound move to the upside is ultimately the most likely outcome, and they expect the price to run in the direction of the 200-day move Average (200 DMA) and a summer breakout around $49k – $50k.

“In our view, bitcoin will continue to fluctuate between $44,000 and $38,000 before breaking out,” Decentrader said.

BTC/USDT daily frame price chart | Source: Decenttrader

For traders hard hit by the recent drop, analyst “John Wick” has noted show a positive perspective.

“I just wanted to take a moment to tell you, who may be at a loss, that it’s okay. This always happens in every cycle. Most of us have had to bear these battle scars at least once on our journey to becoming a professional trader/investor. I know and I did. Do not give up.”

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