A closely followed crypto analyst is warning that Bitcoin (BTC) could have a severe market correction in the coming weeks.
In a new strategy session video, pseudonymous analyst Rekt Capital tells his 54,700 YouTube subscribers that Bitcoin may repeat a historical pattern and crash by up to 30% before the halving event in April.
[adinserter block="1"]The halving event, when miners’ rewards are cut in half, occurs every four years.
“So maybe 20% to 30% [decline] at most is something that we should be potentially aware of occurring in the future because a pre-halving retrace is going to occur after this pre-halving rally. Now that we’ve transitioned into this pre-halving rally we have to look at where we could potentially top out before the halving because this is where people are buying in anticipation of making a few dollars on the halving hype, and then they sell the rumor, they sell the news, essentially.”
The trader also says that Bitcoin may follow a historic pattern and go parabolic months after the halving event.
“And then it’s after the halving, many many months after the halving, where we actually see price appreciate considerably as a result of the halving. This is a supply shock to the system, to the protocol itself. So buying a few weeks beforehand, and then selling around the halving, that’s typically what tends to happen as you’ll see from 2020, 2016. People buy in anticipation of profit potential and then sell just before the halving, that occurs across cycles.
But the thing to really notice is that it’s after the halving where we tend to see parabolic rallying towards the upside. So selling just to make a quick buck … is quite short-sighted in the perspective of the grander parabolic rally that comes several months after the halving. So this pre-halving retrace is caused to a great extent by the traders who want to play this move and profit off of this move. And of course, the sell side price action that occurs, this is where the so-called weak hands tend to sell and capitulate, afraid of seeing new lows, but this volatility around the pre-halving retrace is a shakeout moment.”
Bitcoin is trading for $51,688 at time of writing, up more than 4.5% in the last 24 hours.
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