Bitcoin Price Crosses $52,000 — But Analysts Warn Deep Retracement is Coming

Key Takeaways

• Bitcoin exceeds $52,000, fueled by US ETF success.
• Analysts predict a potential peak and highlight speculative leverage risks.
• An anticipated retracement could target $34,000 to $29,000 levels.

Bitcoin‘s price has soared to cross the $52,000 mark, buoyed by the notable success of exchange-traded funds (ETFs) in the United States, charting a 35% increase in just 22 days. 

This bullish wave has captivated investors and market observers, all eagerly scanning for signs that could herald the peak of this uptrend. Amid this fervor, experts have come forward with insights to identify potential market tops and predict the timing of crucial shifts. 

From the interplay of spot ETF flows and futures speculation driving volatility, as highlighted by Maartunn of CryptoQuant, to the warnings of deeper retracements due to speculative leverage by Ari Paul of BlockTower Capital, the landscape is rife with indicators of both opportunity and caution. 

As Bitcoin navigates these choppy waters, propelled by ETF inflows and technological advancements, the community stands watchful of the delicate balance between bullish momentum and the specter of excess leverage potentially leading to a significant pullback.

Analysts Opinions About Bitcoin Price

Analysts offer mixed views on the current Bitcoin rally, attributing its strength to the surge in demand from the success of exchange-traded funds (ETFs) in the U.S. and advancements in Bitcoin infrastructure.  JA Maartunn , of CryptoQuant, points to the volatility driven by the dynamics between spot ETF flows bolstering demand for Bitcoin and futures speculation, which makes the market prone to fluctuations. He suggests that this volatility could offer opportunities for short-term trading despite making price action more volatile.

Ari Paul  of BlockTower Capital highlights the dual-edged sword of consistent ETF inflows and speculative leverage. While acknowledging the market’s strength, he cautions against the rising speculative leverage that could precipitate a deeper retracement. Paul’s concerns are partly echoed by Will Clemente III , who queries the levels of excess leverage. However, the Reflexivity Research co-founder also suggests the market might not be as overleveraged as it was during peak levels in 2021, leaving room for potential highs.

Adding another dimension, Julio Moreno  from CryptoQuant emphasizes the significant impact of spot Bitcoin ETFs on market demand. He notes the substantial inflow of new money into Bitcoin through ETFs since their launch, contributing to price gains. However, Moreno also warns that a decline in ETF demand or the emergence of outflows could pose risks to Bitcoin’s price stability.

While the analysts recognize the bullish signals from ETF inflows and infrastructure developments, they also highlight concerns around volatility and speculative leverage, suggesting a cautious approach amid the potential for future price corrections.

BTC Getting Overextended

Since November 21, 2020, Bitcoin’s price trajectory has taken a bullish turn, initiating a new cycle after falling below $16,000. This marked the commencement of a five-wave impulse pattern, now approaching its final phase. 

Despite expectations of a correction following an interaction with the $46,000 mark, Bitcoin’s ascent continued, surpassing the $50,000 threshold. The daily chart’s Relative Strength Index (RSI) has reached the overbought territory, suggesting we are nearing the cycle’s peak. 

Our previous analysis identified $53,000 as the next critical resistance level. Following this surge, a pullback could happen, with its extent dependent on the price at the end of the uptrend.

This correction was anticipated to start after interacting with the $46,000 area resulting in a rejection. Now, however,  as the price continued for one more high, we can see a clear overextension. 

The awaited correction should be the first bull market one, which usually comes down to 0.618 Fibonacci retracement. It can also find support at the 0.5 level. In both cases, though, a significant drop should come, with the first target at $34,000 and the second at $29,000. 

Disclaimers

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.