A closely followed crypto analyst is warning investors to avoid getting overly excited after the markets bounced off a flash crash during the weekend.
In a series of posts, Justin Bennett tells his 107,100 Twitter followers that he expects crypto prices will continue to fall, noting that the recent recovery could be a bull trap which lures investors into falsely believing that an extended rally has begun.
“Don’t be fooled. As things stand, this week’s rally is nothing more than a bearish retest/bull trap.
Context is king!”
Bennett provides two charts indicating that Bitcoin (BTC) has fallen below rising channels – the first tracking since 2014, the second since this past April.
The analyst next discusses how altcoins are not likely to be a safe haven due to the larger negative macroeconomic outlook.
“To anyone who says altcoins won’t pull back that far… They already did once.
Alts pulled back over 90% during the last bear market. So to think they’ll stop at -74% this time with raging inflation, a global recession, etc. is naive, [in my opinion].”
Bennett offers a pair of charts tracking the total crypto market cap minus Bitcoin. The first looks at daily candles since May and the other shows weekly candles dating back to 2016.
“Don’t forget to zoom out.
Left: How altcoins look on the daily chart.
Right: How they look on the weekly.
Crypto has lower to go, [in my opinion].”
The crypto guru concludes his analysis by reminding readers about how the S&P 500 tanked last Friday after Federal Reserve head Jerome Powell announced more interest rate hikes. Bennett thinks risk-on assets don’t look promising in the short term.
“A slight rebound from crypto today, but don’t lose sight of what the S&P 500 did on Friday.
The upside for risk assets is limited, [in my opinion].”
Bitcoin is back in negative territory after briefly recapturing the $20,500 level on Monday.
At time of writing, BTC is off by nearly 3% and trading for $19,803.
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