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.
[adinserter block="1"]“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.”
Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
[adinserter block="1"]
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any assets including cryptocurrencies, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/klyaksun
