A Bitcoin analyst has flagged potential trouble for the cryptocurrency market, suggesting a significant decline could be on the horizon. This warning comes as Bitcoin struggles to surpass a key resistance level, opening the possibility of the price falling to around $81,500.
Currently, Bitcoin has experienced a 15% drop, retreating from its recent peak of approximately $108,365, according to Bitstamp data. The price slide is attributed to the reviving dominance of stablecoin Tether in the crypto market. This trend indicates a possible ‘huge dump,’ given the negative correlation between Bitcoin prices and the USDT Dominance Index.
The USDT Dominance Index, which measures Tether’s share in the total cryptocurrency market, is showing signs of recovery after touching support levels noted last March. Historically, a rise in this index has aligned with Bitcoin nearing local highs, suggesting a shift of capital into Tether likely due to anticipated market volatility.
Analysts from The ForexX Mindset have noted that this could lead to a deceptive pump in Bitcoin’s price, luring traders into a trap before a substantial price drop. They advise caution, warning that a sudden surge might mislead investors into expecting a market surge, only for a sharp subsequent fall to wipe out early investors.
Bitcoin’s recent modest recovery from its December low of $92,120 saw it rise to $96,740 by the end of December. Yet, this uptick could form an ‘institutional ambush,’ where larger players, such as dark pools and whales, might manipulate prices upwards to attract retail interest before selling off at peaks.
Technical indicators reinforce the bearish outlook. Bitcoin’s inability to exceed the 1.618 Fibonacci extension level and the entering of the weekly relative strength index into overbought territory are classic signals of diminishing bullish momentum. Currently trading near $96,000, Bitcoin might target the 20-week exponential moving average at $81,500 if corrections persist. Further declines could test the 50-week EMA near $67,700.
Conversely, if Bitcoin manages to stabilize above the 1.618 Fibonacci line as support, some analysts speculate it could reach $150,000 by mid-2025. However, this prospect comes amid broad warnings of potential risks and volatility in the market. Readers are advised to exercise due diligence and research before making investment decisions.
