Bitcoin analyst warns of a “big drop” despite stablecoin rally
Bitcoin’s failure to break above a critical resistance level has increased the risk of a potential drop towards $81,500.
Bitcoin analyst warns of a “big drop” despite stablecoin rally
MARKET ANALYSIS
Bitcoin has declined 15% a week after setting its all-time high of around $108,365, according to data from Bitstamp. The cryptocurrency could fall further in the coming weeks due to a significant recovery in Tether’s market dominance.
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USDT.D weekly performance against BTC/USD. Source: TradingView
Tether's dominance signals a 'big drop' in the Bitcoin market
According to TradingView contributor The ForexX Mindset, the price of Bitcoin (BTC) could experience a “big drop” due to its negative correlation with the USDT Dominance Index (USDT.D), a measure of Tether’s participation.
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in the cryptocurrency market in general.
Notably, the USDT.D metric is showing signs of a significant bounce after reaching support levels not seen since March. At that time, USDT.D rebounded sharply from similar support near the 3.80% level, which coincided with Bitcoin hitting a local high around $73,800.
Weekly performance comparison of BTC/USD and USDT.D. Source: The ForexX Mindset
The bounce suggests a search for safety as traders move capital into Tether, likely anticipating a rise in market volatility or downward pressure. The ForexX Mindset sees similar Bitcoin drops on the way, asking traders to ignore any short-term price gains.
“We will likely see a strong rally in price — that’s the pump — which could fool people into believing the market is about to take off,” the analyst said, adding:
“But don’t rely on that. This is a trap. Right after that rally comes a big drop, and anyone who gets in too early could get wiped out.”
The bearish outlook emerged when Bitcoin showed a modest recovery from its December low of around $92,120. By December 27, the BTC/USD pair had risen to a high near $96,740.
However, according to The ForexX Mindset, this recovery could create an “institutional ambush.”
The analyst warns that dark pools and whales could deliberately inflate Bitcoin prices to attract retail traders, only to unload their holdings at local highs, leaving smaller investors with considerable losses.
Bitcoin bears target $81,500 in January
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Bitcoin is experiencing a correction after failing to break above the 1.618 Fibonacci extension level near $102.734.
The drop comes as the weekly Relative Strength Index (RSI) enters overbought territory while displaying bearish divergence from its prices by forming higher highs, a classic sign of weakening bullish momentum.
BTC/USD weekly price chart. Source: TradingView
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 drop could see Bitcoin retest the 50-week EMA near $67,700, which aligns with the 1.0 Fibonacci retracement level.
Meanwhile, reclaiming the 1.618 Fib line as support could enable a Bitcoin price rally towards $150,000 by the first half of 2025, a record target previously predicted by multiple analysts.
