Bitcoin Faces Price Correction Risks, Analyst Warns
Bitcoin (BTC) continues to face the risk of a price correction due to sell pressure from short-term holders and the illiquid market environment during the holiday season, according to Bitfinex Head of Derivatives Jag Kooner. Kooner stated that if short-term holders and retail leverage continue to dominate the market, it could result in further drawdowns. The $44,000 mark is seen as a profit realization point for medium-term holders, and profit-taking by short-term holders has contributed to the recent retracement in the bitcoin price.
Longest Streak of Realized Profits Raises Concerns
A recent report by Bitfinex revealed that there have been 67 consecutive days of bitcoin net realized profitability for all holder cohorts. This streak of realized profits is the longest since October 2020 to February 2021, which historically leads to market corrections in bull markets. The analysts at Bitfinex predict potential pullbacks in the entire cryptocurrency market before it reaches a high of $3.2 trillion by the end of 2024. They expect a post-pullback recovery based on historical market behavior.
Bitcoin’s Current Price and Market Outlook
As of now, Bitcoin is trading flat at $42,898. Despite the potential risks and pullbacks, analysts believe that the market environment is similar to previous periods that saw initial dips in price followed by sustained recoveries. This suggests that Bitcoin’s current valuations imply further range-bound trading or a possible pullback instead of an immediate upward move.
Hot Take: Bitcoin’s Price Correction Risk Amidst Holiday Season
The sell pressure from short-term holders and the illiquid market environment during the holiday season pose significant price correction risks for Bitcoin. While medium-term holders may realize profits at the $44,000 mark, the recent retracement in the bitcoin price can be attributed to profit-taking by short-term holders. Bitfinex’s analysts warn of potential pullbacks in the entire cryptocurrency market before it reaches a high of $3.2 trillion by the end of 2024. Despite these risks, Bitcoin’s current valuations suggest a range-bound trading or possible pullback before a sustained recovery.
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