Why Are Bitcoin Ordinal Inscription Tokens ORDI, SATS Degrading?
The cryptocurrency market saw significant declines in several digital assets in January, with coined tokens – aka BRC-20 tokens – such as ORDI and SATS among the hardest hit.
The reasons behind the underperformance of these particular tokens include several other important factors besides the recent price fluctuations of Bitcoin (BTC).
Low demand for inscriptions
Specifically, the value of ORDI and SATS fell by about 34.50% and 50%, respectively, by 2024.
The decline was mainly due to a growing “sell the news” sentiment in the crypto market, led by Bitcoin. As of January 25, the correlation between ORDI and BTC was 0.66. It has been positive in recent history.
Additionally, this depressed pace has been offset by a significant reduction in cryptographic fees and Bitcoin's block size share, indicating that demand for Bitcoin regulations is decreasing.
The price movements of writing tokens are closely aligned with BTC itself, largely because Bitcoin Ordinals uses Bitcoin's blockchain.
ORDI, for example, involves writing data directly onto the Bitcoin blockchain, creating a unique digital legacy of Bitcoin transaction results.
Technical conditions
In addition to broader market trends, bearish divergence signals were key to recent ORDI and SATS price declines.
For example, the ORDI/USDT daily chart showed a familiar bearish divergence pattern between December 5, 2023 and January 2, 2024. Simply put, the ORDI price was higher, but the Relative Strength Index (RSI) was moving lower. High.
The following 45% reversal was consistent with a bearish divergence signal where the divergence between RSI and price action precedes a price correction.
Similarly, the SATS price retreated more than 60% after showing a gap between the rising price and the falling RSI.
Overall, the difference in sentiment on the ORDI and SATS charts has drawn attention from traders.
ORDI, SATS price analysis
From a technical perspective, ORDI has a lot of room to decline in the coming days or weeks.
In particular, the cryptocurrency has been breaking out of an ascending triangle reversal. This indicates a situation where an ascending triangle pattern fails to function as a continuation pattern and instead leads to a trend reversal.
Related: Bitwise Bitcoin ETF attracts donations of wallet articles and rare sats
ORDI's breakout target is $38.50 in February, measured by calculating the maximum distance between the upper and lower trend lines of the triangle and subtracting the result from the breakout point, as shown above.
Interestingly, the $38.50 target coincides with the 0.618 Fibonacci retracement line.
On the other hand, SATS dropped to a resistance-turned support level at $0.00000036. At the same time, RSI dropped below 30, oversold territory. Both indicators point to the possibility of a return to 0.00000043 in February.
Conversely, a break below the $0.00000036 support has the risk of collapsing the SATS price towards the 0.786 Fib line at $0.0000029.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
