There has been a significant decline in several digital assets in the cryptocurrency market in January, with inscription tokens, also known as BRC-20 tokens, like ORDI and SATS being the most affected.
The underperformance of these unique tokens can be attributed to various factors in addition to the recent price fluctuations of Bitcoin (BTC).
The price of ORDI and SATS has dropped by approximately 34.50% and 50% respectively since the beginning of 2024. This decline is primarily due to a growing “sell the news” sentiment in the crypto market, led by Bitcoin. The correlation coefficient between ORDI and BTC has remained positive, indicating a strong correlation.
Furthermore, the bearish momentum has coincided with a decrease in inscription fees and Bitcoin block size share, indicating a diminishing demand for Bitcoin ordinals.
The price movements of inscription tokens closely align with BTC itself because Bitcoin Ordinals utilizes Bitcoin’s blockchain. ORDI, for example, involves inscribing data directly onto the Bitcoin blockchain, creating a unique form of digital artifact within Bitcoin’s transaction outputs.
In addition to market trends, bearish divergence signals have played a key role in the recent price drops of ORDI and SATS. The charts for both tokens exhibited classic bearish divergence patterns, indicating a potential trend reversal or at least a pause in the prevailing uptrend.
From a technical standpoint, ORDI has further room for decline in the coming days or weeks. It has undergone an ascending triangle reversal breakdown, which suggests a trend reversal. The breakdown target for ORDI is around $38.50 by February, coinciding with the 0.618 Fibonacci retracement line.
On the other hand, SATS has dropped to its resistance-turned-support level of $0.00000036 and its RSI has entered oversold territory. Both indicators suggest a potential rebound towards 0.00000043 by February. However, a break below the $0.00000036 support could lead to a crash in SATS’s price towards its 0.786 Fib line of $0.0000029.
Please note that this article does not provide investment advice or recommendations. It is important for readers to conduct their own research before making any investment or trading decisions.