A Crypto Analyst Warns of a Potential Max Pain Scenario for Traders
A well-known analyst is cautioning crypto traders against seeking quick and effortless gains this year. Justin Bennett, a trader with a significant following on X, emphasizes the importance of closely monitoring the TOTAL chart, which tracks the overall market cap of all cryptocurrencies.
Bennett shares a chart that indicates similarities between the current price action and the 2019 pattern, where TOTAL respected the 0.618 Fibonacci retracement level before experiencing a significant correction of around 70%. He suggests that it’s possible for the entire crypto market to undergo a correction and consolidation phase for the next 12 months before surging to new all-time highs.
According to Bennett, it’s crucial to consider the possibility of sideways or downward movement in the crypto market without becoming emotional or overleveraged. He believes that markets don’t repeat but rather rhyme.
Predictions for the Crypto Market
Bennett’s chart implies that the total market cap of all crypto assets could drop to approximately $700 billion later this year before rallying to a new all-time high above $4 trillion by 2025. Currently, TOTAL is valued at $1.653 trillion, suggesting a potential devaluation of about 57% if it reaches Bennett’s downside target.
Regarding Bitcoin (BTC), Bennett asserts that bears have the advantage as long as the cryptocurrency remains below $44,500. He advises caution while below this level and believes that bulls need to reclaim it on higher time frames to have a chance at reaching $50,000.
As of now, Bitcoin is trading at $43,029.
Hot Take: Proceed with Caution and Consider Alternative Scenarios
It’s essential for crypto traders to be aware of potential scenarios that could impact their investments. While the market’s recent performance has been positive, there is always a chance for corrections and consolidations. Bennett’s analysis serves as a reminder to approach trading with caution and to avoid overleveraging. By considering alternative scenarios and remaining emotionally detached, traders can better navigate the volatility of the crypto market.
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