Bitcoin faces a risk of near-term price correction, Bitfinex analyst said.
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It continues to face price correction risk due to selling pressure from short-term holders and illiquid market conditions over the holiday period, one analyst said.
“We expect more losses if short-holders and retail leverage continue to play a dominant role in the market and lead to continued downside in a relatively illiquid holiday season market environment,” Bitfinex head of derivatives Jag Kooner told The Block. He said.
Bitcoin price correction risk
According to Kuehner, Bitcoin is at risk of a price correction above $44,000. The analyst said this level serves as a take-profit point for medium-term holders, which are individuals who have maintained their Bitcoin holdings for between 18 and 24 months.
The Bitfinex analyst added that profit-taking by a group of short-term holders was the main reason for the recent Bitcoin price retracement. “Short-holder interests have overheated and led to the current slump,” Kooner said.
However, a recent Bitfinex report showed a sustained 67-day period of Bitcoin net realized profitability for all groups of Bitcoin holders. “This is the longest streak of realized gains since the period from October 2020 to February 2021, and such streaks typically lead to market corrections in bull markets,” several Bitfinex analysts said in the report.
In the report, analysts added that based on historical market behavior, the overall cryptocurrency market could see a decline before rising to a peak of $3.2 trillion by the end of 2024. “The current Bitcoin valuation suggests that market conditions are similar to surrounding periods. In June 2019 and July 2016, there was an initial price decline before a sustained recovery. We see Bitcoin hovering in the $44,000-$45,000 area. After tagging , we expected a decline to occur and why do we expect the price to range further from this price or decline instead of an immediate rise?” they added.
The world’s largest cryptocurrency by market capitalization was trading at $42,898 as of 8 a.m. ET over the past 24 hours, according to The Block’s pricing page.
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