Bitcoin May Face 30% Downturn Amid Overheated Market Conditions
Summary:
Bitcoin might see a 30% decline to alleviate its "overheated" status, according to analysis by CryptoCon. He suggests a BTC price of $30,000 is still possible and points to historical trends necessitating a drop. Despite recent gains, BTC corrections often align with historical downturns. However, before any correction occurs, Bitcoin could potentially reach up to $48,000, amidst anticipation of the US approval of the first Bitcoin exchange-traded fund.
Bitcoin (BTC) might experience a 30% downturn to alleviate the "overheated" state of its most dependable indicators, as examined on X platform (formerly Twitter) on the first day of January. Well-regarded analyst CryptoCon suggested that a Bitcoin valuation of $30,000 might still be plausible. Although Bitcoin hovered around $45,000 this week, historical trends suggest a decline that signals the outset of 2024. CryptoCon also pointed out that the directional movement index (DMI) has attained points that normally precede a downturn in the bullish trend.
CryptoCon clarified, “I have held a positive view of Bitcoin throughout 2023, but the data indicates a cooling-off period as we embark on 2024”. He further added, “It's a tussle between long-standing reliable data and those hoping this period might be an exception. I have made my choice!” A corresponding chart displayed the current DMI readings that mirror those of mid-2019, the juncture at which BTC/USD recorded its mid-cycle peak for the previous price cycle.
At that time, the pair slid more than half over the ensuing 16 months, worsened by the global market crash due to COVID-19 in March 2020. Even though the current situation may not be as severe, CryptoCon put forth an approximate figure of 30% correction, which would align with historical downturns, as depicted in the above chart by on-chain analysis company Glassnode.
In a later update on Jan. 2, CryptoCon conceded that Bitcoin might generate more bullish performance prior to any corrective action — possibly reaching a much-hyped target of $48,000 in anticipation of the first-ever spot Bitcoin exchange-traded fund (ETF) approval in the United States.
Although market data has been, as CryptoCon put it, in an "overheated and topped out" state, the Bitcoin price has defied that and has not cooled off yet as 2024 begins. Bitcoin broke the $45,000 mark to the upside, implying that other data trends such as MVRV-Z might soon reach their respective peaks if the current trend holds.
Despite the bullish performance, several data points have started to signal caution to those expecting the upward trend to continue. Examples of these were some of the highest funding rates seen in more than a year, suggesting traders might be overly optimistic in assuming that price increases are guaranteed.
However, not all market players were alarmed. Over the weekend, popular commentator and trader, known as Horse, noted that compared to the last cycle, funding remained within reasonable limits.
This news piece does not offer any trading or investment advice and any financial move involves risk. Readers are advised to carry out their own research and evaluate their options carefully.
Published At
1/2/2024 9:10:00 PM
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