The cryptocurrency market experienced a notable decline in January, with BRC-20 tokens, known as Inscription tokens, such as ORDI and SATS, being significantly affected. This downturn is attributed to several factors, including Bitcoin’s recent price movements. ORDI’s price dropped by 34.5%, while SATS plummeted by 50%, largely due to a sell-off triggered by the broader crypto market led by Bitcoin. As of January 25, the correlation coefficient between ORDI and Bitcoin remains positive at 0.66.
The decline coincided with a visible reduction in ecosystem transaction fees and Bitcoin block size share, reflecting decreased demand for Bitcoin Ordinals assets. Bitcoin Ordinals, which utilize Bitcoin’s blockchain network, have price movements that correlate with Bitcoin’s price, as seen with ORDI, which involves writing data directly onto the Bitcoin blockchain and creating a new asset form within Bitcoin’s transaction codes.
ORDI/USDT‘s daily chart showed a classic bearish divergence formation between December 5, 2023, and January 2, 2024, with ORDI’s price making higher highs while the Relative Strength Index (RSI) made lower highs. This divergence preceded a 45% pullback, consistent with the bearish divergence signal of a price correction. Similarly, SATS’s price suffered a decline of over 60% after showing a bearish trend signal with rising prices and a falling RSI.
Overall, the bearish trends observed in ORDI and SATS charts have caught investors’ attention, indicating a potential trend reversal or at least a pause in the dominant bullish trend. Technically, ORDI may have more room to fall in the coming days or weeks. ORDI’s chart pattern suggests a reversal from an ascending triangle formation, with a breakdown target of $38.50 by February after calculating the maximum distance between the triangle’s trend lines.
Conversely, SATS fell towards a converted support level of $0.00000036, with the RSI dropping below the oversold threshold of 30, hinting at a potential recovery towards $0.00000043 by February. If the $0.00000036 support level breaks, SATS risks falling towards the $0.0000029 level, which corresponds to the 0.786 Fibonacci line.