Bitcoin Analyst Warns of Huge Price Dump Amid Recovering Stablecoin Dominance
Bitcoin has experienced a significant correction in the past week, with its price declining by around 15% from its record high of approximately $108,365. According to data from Bitstamp, this downward trend may continue in the coming weeks due to the recovering dominance of Tether (USDT) in the cryptocurrency market.
Tether Dominance Signals ‘Huge Dump’ in Bitcoin Markets
A recent analysis by TradingView contributor The ForexX Mindset suggests that the negative correlation between the USDT Dominance Index (USDT.D) and Bitcoin’s price may be a crucial factor in this correction. The analyst notes that the USDT.D metric has been on the rise after hitting support levels last seen in March, when it rebounded sharply from similar support near 3.80%.
Understanding the USDT Dominance Index
The USDT Dominance Index (USDT.D) is a measure of Tether’s share in the overall cryptocurrency market. It serves as an important indicator of market sentiment and can provide insights into potential price movements. A rising USDT.D value typically suggests that investors are seeking safety in Tether, often anticipating increased market volatility or downside pressure.
A Flight to Safety?
The ForexX Mindset attributes the recent rebound in USDT.D to a "flight to safety" among traders. As Bitcoin’s price surged to new highs, many investors may have shifted their capital into Tether, seeking a more stable store of value. This shift could lead to a sharp spike in price, followed by a significant correction.
Ignoring Short-Term Price Gains
The analyst warns that traders should be cautious and not get caught up in the hype surrounding short-term price gains. "We’ll probably see a sharp spike in price – that’s the pump – which might fool people into thinking the market is about to take off," The ForexX Mindset says. However, this is merely a trap, and anyone who jumps in too soon could get wiped out by the subsequent correction.
The Bearish Outlook: A Correction or a Crash?
The bearish outlook for Bitcoin emerged as the cryptocurrency staged a modest recovery from its December low of around $92,120. By Dec. 27, the BTC/USD pair had climbed to a high near $96,740. However, this recovery may have created an "institutional ambush" for retail traders.
Dark Pools and Whales: A Trap for Retail Investors
The ForexX Mindset suggests that dark pools and whales may be deliberately pumping Bitcoin prices to attract retail traders. Once they’ve accumulated a sufficient number of buyers, these institutional investors may offload their holdings at local highs, leaving smaller investors to shoulder considerable losses.
Bitcoin’s Next Downside Target: $81,500
The pullback in Bitcoin’s price comes as the weekly relative strength index (RSI) enters overbought territory while showing bearish divergence with respect to its prices forming higher highs. This classic signal of waning bullish momentum could lead to a significant correction.
A Further Decline: $67,700 or Beyond?
Currently trading near $96,000, Bitcoin’s next downside target could be the 20-week exponential moving average (EMA) around $81,500 if the correction deepens. A further decline could see Bitcoin retesting the 50-week EMA near $67,700, which aligns with the 1.0 Fibonacci retracement level.
A Record-High Target: $150,000 by 2025?
On the other hand, claiming the 1.618 Fib line as support could enable a Bitcoin price rally toward $150,000 by the first half of 2025. This target was predicted earlier by multiple analysts and suggests that there may be more to this correction than meets the eye.
Disclaimer: Trading and Investing Carry Risk
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. It’s essential to understand that past performance is not indicative of future results and that no one can predict with certainty the outcome of any market event.
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