A widely followed crypto market analyst is laying out potential scenarios for a Bitcoin (BTC) correction before taking off to new all-time highs.
The analyst known as Cred says Bitcoin could potentially plunge below $52,000 if the market is overleveraged.
“If we’re gonna dip deeper and weekly market structure is constructive, where can we reasonably expect a higher low to come into effect? The answer to that I don’t know, I think it’s somewhere here [$44,000-$52,000].
It also depends on what the leverage market looks like at that point. If you get a big puke, and then funding keeps going positive and leverage keeps buying the dip as the market moves lower, you can set expectations for a deeper wick.”
He thinks that support around $56,000 and $58,000 would likely stand as a strong foundation for continued BTC bullishness.
“But in terms of trade setups at structure, your nearest setup is a move below previous week’s low into the 56k to 58k support.
That’s your nearest bullish continuation setup at structure to pay attention to.”
At the time of writing, Bitcoin is trading at $59,129, according to CoinGecko.
Like Cred, Crypto Quant CEO Ki Young Ju is also expecting some volatility. Ju points out that the market appears over-leveraged as the BTC estimated leverage ratio, which tracks the ratio of open interest divided by the reserve of an exchange, looks to be approaching a new all-time high.
“BTC estimated leverage ratio is about to hit a year-high. It seems obvious that the market is over-leveraged now.
We’ll see some volatility shortly.”
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