Bitcoin price stabilized near $43,000 after sell-off, while traders’ attention turned to layer 1 tokens

Bitcoin price looks like it is trying to stabilize around $43,000 after falling near $42,000. At the time of writing, BTC is trading at $42,979. Most of the dumping events took place on Wednesday during U.S. trading hours. Notably, the leading cryptocurrency price took only a small hit during Asian hours on Thursday.

bitcoin-price-stabilized-near-43000-after-sell-off-while-traders-attention-turned-to-layer-1-tokens

BTC/USD 4-hour chart | Source: TradingView

Bitcoin price trades sideways after yesterday’s sell-off

Bitcoin price dipped below initial support at $45,000 yesterday but has since stabilized around $42,000, near the December 5 low. Oversold signals remain in place shows that selling pressure may gradually decrease.

“Interest in buying the dip has spiked after Bitcoin dropped below $43k yesterday. Hovering just above it now, it is altcoins that are seeing the real bounces, while BTC stays dormant for now”, Santiment stated.

bitcoin-price-stabilized-near-43000-after-sell-off-while-traders-attention-turned-to-layer-1-tokens

Source: Santiment

Since November, support ranges and oversold levels have been seen as a contrarian with a string of lower prices. This reduces the probability of buying power significantly until the downtrend is reversed. There is a strong resistance ahead that could limit near-term upside moves. For example, price momentum turned negative on the monthly chart, indicating a possible trend change from bullish to bearish.

Furthermore, Bitcoin is still stuck below key moving averages and about 35% below its all-time high, around $69,000. The cryptocurrency has fallen about 8% over the past week as buyers could not sustain a breakout above $50,000.

The Crypto Fear & Greed Index, which measures sentiment among market participants, has been at its lowest level since July. The low reading indicates market fear and is often a contrarian indicator among crypto traders.

“The Fear and Greed Index hasn’t signaled greed in more than one and a half months – an unusually long period of negative market sentiment. Still, the index can remain in “Extreme fear” mode for as long as a month as prices typically move sideways before a decisive move up or down.

bitcoin-price-stabilized-near-43000-after-sell-off-while-traders-attention-turned-to-layer-1-tokens[1]

Crypto Fear & Greed Index as of January 7 | Source: Alternative.me

Bitcoin is roughly 35% below its all-time high of almost $69,000, set in November. The drawdown, or percentage decline from peak to trough, is the largest since July. Previous drawdowns have reached levels of nearly 80% and took several months to recover.

In another development, Avalanche (AVAX), Terra (LUNA), and Solana (SOL) fell by as much as 12% in the past 24 hours. Polkadot (DOT) saw its tokens fall by 14% before a slight revival. While a few layer 1 tokens, such as Harmony (ONE), Fantom (FTM), Cosmos (ATOM), and NEAR (NEAR), quickly turned to green despite broader market sell-off.

Layer 1 blockchains have been one of the biggest narratives in the crypto industry, especially in the past few years. Their success came as Ethereum, the No. 1 blockchain by the total value of tokens locked in the smart contract, became too congested, leading to an increase in its transactions fees.

The overall cryptocurrency market cap stands at $2.052 trillion, and Bitcoin Dominance is 39.6%.

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