Bitcoin’s recent surge has come to an end as the cryptocurrency plummeted by 15% in a week, dropping from its record high of around $108,365. According to data from Bitstamp, the decline is likely due to a sharp rebound in Tether market dominance.
Understanding USDT Dominance
The USDT.D metric, which measures Tether’s share in the overall cryptocurrency market, has shown signs of a significant rebound after hitting support levels last seen in March. At that time, USDT.D bounced back sharply from similar support near the 3.80% level, coinciding with Bitcoin reaching a local top of around $73,800.
The rebound suggested a flight to safety as traders shifted capital into Tether, likely anticipating increased market volatility or downside pressure. This phenomenon has been observed in the past, where traders move their funds into stablecoins like USDT during periods of uncertainty.
Bitcoin’s Negative Correlation with USDT Dominance
A closer look at the data reveals a negative correlation between Bitcoin and USDT.D. When Tether market dominance increases, Bitcoin’s price tends to decline. Conversely, when Bitcoin’s price rises, Tether’s share in the market often decreases. This inverse relationship highlights the importance of monitoring USDT.D levels for potential insights into future price movements.
The ForexX Mindset: A Bearish Outlook
TradingView contributor The ForexX Mindset shares a bearish outlook on Bitcoin, warning traders to ignore short-term price gains. According to the analyst:
"We’ll probably see a sharp spike in price — that’s the pump — which might fool people into thinking the market is about to take off. But don’t trust it. This is a trap. Right after that spike, a huge dump is coming, and anyone who jumps in too soon could get wiped out."
The analyst believes that dark pools and whales may deliberately pump Bitcoin prices to attract retail traders, only to offload their holdings at local highs, leaving smaller investors to shoulder considerable losses.
Technical Analysis: A Correction in Progress
Bitcoin’s recent correction can be attributed to its failure to break above the 1.618 Fibonacci extension level near $102,734. The pullback has led to a decline in the weekly relative strength index (RSI), which is now showing bearish divergence with respect to prices forming higher highs.
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 decline could see Bitcoin retesting the 50-week EMA near $67,700, which aligns with the 1.0 Fibonacci retracement level.
Potential Targets and Resistance Levels
- Short-term: The 20-week exponential moving average (EMA) around $81,500
- Medium-term: The 50-week EMA near $67,700
- Long-term: Claiming the 1.618 Fibonacci line as support could enable a Bitcoin price rally toward $150,000 by the first half of 2025
Conclusion
The recent decline in Bitcoin’s price has sparked concerns among traders and investors. While some may see this as an opportunity to buy, others are cautioning against getting caught off guard by potential further declines.
As with any investment or trading decision, it is essential to conduct thorough research and consider multiple perspectives before making a move. This article aims to provide insights into the current market situation, but readers should not rely solely on this information when making their own decisions.
Related Articles
- BTC could rebound in ‘coming days’ as metric signals growing buy pressure
- Bitcoin bears eye $81,500 in January
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Note: This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
