Bitcoin May Not Once To The Moon
Sentiment in the cryptocurrency market has been high recently, with not only Bitcoin rising to nearly $68,000, but Ethereum also breaking through the $2,600 mark. However, several analysts warned that the market may be facing a correction.
According to (Cointelegraph), Hyblock Capital CEO Shubh Varma stated in a report yesterday (16th): “A prudent approach may be to anticipate a final correction before the market attempts to rise again.”
Varma said that Binance exchange data shows that less than 40% of retail traders currently hold long (bullish) positions, which may indicate a potential correction, but it may also become a bearish signal if retail investors begin to pour into long positions in large numbers. .
Varma also highlighted that Bitcoin’s open interest has reached historical resistance levels and that a pullback to wash out the bulls may be imminent. He predicts a decline in Bitcoin price, followed by a drop in open interest, potentially confirming the completion of the pullback.
Chart source: CoinGlass Bitcoin exchange open interest volume (USD)
What do other analysts think?
However, not all analysts believe the surge in open interest will necessarily lead to a pullback.
Lark Davis, a celebrity in the foreign currency circle, believes that this instead indicates a potential large-scale rally, because attention and liquidity flow back into the cryptocurrency market, which usually indicates that major price changes are coming.
Markus Thielen, founder of cryptocurrency analysis agency 10x Research, expects Bitcoin to fall back to February levels, believing that then is the best opportunity to buy the dip. He said on August 7:
“To ideally time the next bull market entry, we’re targeting Bitcoin prices falling to as low as $40,000.”
Ethereum is also at risk of over-leverage
Cointelegraph senior analyst Marcel Pechman pointed out that the open interest volume of Ethereum reached a record high on October 16, but it may be a warning sign for the market.
Pageman said surges in demand for leveraged positions often lead to severe pullbacks.
He reviewed historical data, noting that after total open interest in Ethereum peaked on August 2, it plummeted 31.7% in less than four days, from $3,205 to $2,186, and he worried that history might repeat itself.
Image source: CoinGlassMarcel Pechman pointed out that the open interest volume of Ethereum has soared
Figure source: Daily trend of Ethereum analyzed by TradingViewMarcel Pechman
Ethereum Could Plunge 25% Assuming Markets Go Neutral
Pageman further explained that while "hindsight" analysis can help investors identify the local top of the Ethereum open interest chart, it is impossible to predict whether the contract volume will continue to grow further and exceed 5.1 million ethers. currency.
He noted that the last few times similar spikes have occurred, the cryptocurrency market has either traded sideways or experienced short-term corrections, which adds to the complexity of the analysis.
But he also warned that assuming the overall trend of the cryptocurrency market remains neutral, Ethereum could plunge 20% to 25% to around $1,960, suggesting that investors should prepare for this scenario.
However, investors don’t need to be too pessimistic. He said that if Bitcoin finally breaks through the $70,000 resistance level, the high leverage used in the Ethereum market may be conducive to bullish momentum and may push the price further upward.
[Disclaimer] There are risks in the market, so investment needs to be cautious. None of the above views constitute investment advice, and users should consider whether any opinions, views or conclusions in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
