The parabolic rise of Bitcoin, far above the previous everyday high, many people of 2017 have experienced with déjà vu, and a number of analysts are concerned that the market is in arrears for a significant correction.
On January 8, the price of Bitcoin (BTC) reached an all-time high of $ 41,940, and the collapse of 28% to $ 31,076 this week, professionals and retail investors feared a strong reversal in the trend .
The historical data of Bitcoin shows that rapid parabolic ascents are usually followed by equally catastrophic corrections such as those seen after the 2017 bull run. As a result, the current market’s similarities with the euphoric mania from 2017 to 2018 did not go unnoticed.
Timothy Peterson, global macro investment manager at Cane Island, recently pointed out that:
“The risk of Bitcoin is approaching the 2017 levels. Investors who buy at this price can expect to lose 40% of their investment somewhere in the future. However, the typical maximum withdrawal is 30%, so this risk is only modest from the average. ‘
In a subsequent private conversation with Cointelegraph, Peterson noted that there is another short-term case for Bitcoin that reads:
‘For the valuation of bitcoin to reach 2017 levels, it must be at least $ 80,000. There is a small chance that this would happen, and if it did, it would happen quickly. High prices tend to move even higher. ‘
Repeated bubble or lower support?
There are some clear signs that the quick gains of Bitcoin reflect a manic market on the verge of a corrisiton, and the current debate versus bear debate focuses on whether volatility is a healthy setback this week to lower test support before the price starts the next step higher.
LookIntoBitcoin, founder and analyst of Decentrader, Philip Swift the case settled that Bitcoin’s recenet price action reflects a “required downturn / slowdown” and he noted that several indicators are flashing red, indicating that the rate of BTC’s price increase is reaching its extreme.
Swift said:
‘The price is now back below the x3 multiple, where I expect it to stay for a while. As others have talked about this, the price has probably risen to x3 (beyond x2), because we had an earlier mania phase in the cycle versus the last cycle, while both retail and institutions bought. ‘
Swift’s analysis indicates that BTC is likely to trade sideways and rise slowly in the short term, but at a slower pace ‘as money / profit turns into altcoins.’ Recent price movements in altcoins, especially DeFi-related tokens, indicate that this rotation may already be underway.
BTC bulls are not done yet
While analysts and map viewers are appealing to Bitcoin to take a breather, bullish traders may have indicated they have different plans. This week, bulls defended the retest of lower support by buying in every dive, and there is also the expectation that institutional inflows to BTC will resume now that Grayscale has reopened its GBTC family of products.
A look at the average daily sentiment score of 30 days for Bitcoin shows that the average score has declined only slightly despite the decline of recent highs and that it is much higher than the lows seen during previous downcy cycles.
Although few people know what the exact course of Bitcoin’s price action will be this weekend, the strengthening fundamentals from a technical perspective, the increased institutional inflows and positive announcements by government regulators indicate that the recent declines were nothing more than sound corrections likely before. Bitcoin gears would not occur. to reach a new record of all time.
The views and opinions expressed herein are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading movement involves risk. You must do your own research when making a decision.