Bitcoin and Ethereum Prices Can Retrace Further
In a recent report, top analyst Markus Thielen has revealed the reasons behind the recent fall in Bitcoin and Ethereum prices. Thielen points to several factors that have contributed to the market correction:
- The weak market structure of Bitcoin, which experienced a significant rally to new all-time highs despite low trading volumes and liquidity.
- Volatility and unpredictability in the market, influenced by US inflation and jobs data.
- MicroStrategy shares trading at 60-90% overvalued relative to its Bitcoin holdings and returns.
- The reluctance of central bank officials to implement rate cuts, dampening market sentiment.
Based on these factors, Thielen predicts that the price of Bitcoin could fall to $63,000 before resuming its upward rally. Other analysts have also made similar predictions, suggesting that further price drops may occur before the next bitcoin halving event.
Ethereum, on the other hand, is also showing signs of weakness after the Dencun upgrade. The introduction of Layer 2 chains has diluted Ethereum’s yield, and there is only a 30% chance of spot Ethereum ETF approval. Additionally, weak technical chart patterns indicate a potential consolidation or further pullback in ETH price.
Currently, ETH is trading at $3,730, experiencing a 0.5% decrease in the last 24 hours and a 6% decrease over the past week. Trading volume has also dropped by 25% in the same 24-hour period.
Meme Coins Rally Has Topped
The recent rally in meme coins, particularly Shiba Inu, was largely driven by confident buying from BlackRock clients and supported by Bitcoin ETFs. However, this momentum appears to be fading, as South Korea’s trading volume has decreased significantly in recent weeks. Several factors suggest that meme coins may have reached a short-term peak and could experience a price correction:
- Altcoin rallies, including meme coins, are closely tied to Ethereum’s bullish momentum. With rising uncertainty, these altcoins are at risk of falling in price.
- The decrease in meme coin trading volume in South Korea indicates the end of the meme coin mania and the potential start of a broader correction.
- A whale recently dumped 1 trillion SHIB tokens onto a crypto exchange during a broader market selloff, further contributing to the potential correction.
Hot Take: Be Cautious and Book Profits
As Bitcoin and Ethereum face the possibility of further retracements, it is important for investors to exercise caution and consider booking profits. Markus Thielen, who accurately predicted a BTC price retracement to $38,000 after the spot Bitcoin ETF approval, suggests that Bitcoin could drop to $63,000 before resuming its rally. This provides an opportunity for investors to take profits and potentially re-enter the market at lower prices.
The weakening market structure, volatility influenced by external factors, and the end of meme coin mania all contribute to the need for cautious investment strategies. By monitoring market trends and staying informed about key developments, investors can make informed decisions and navigate potential corrections in the crypto market.
It is always important to remember that cryptocurrency investments come with risks. The market is highly volatile and subject to various factors that can impact prices. Therefore, it is crucial to conduct thorough research, diversify portfolios, and consult with financial advisors before making any investment decisions in the crypto space.
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