Analyst points out that Bitcoin could drop more than 50% in the short term

While the launch of a Bitcoin ETF in the US, after more than eight years of waiting, has sent the price of the BTC hitting new historic highs, it could also be the catalyst for a bearish market.

According to analysts, the ETF generated a large FOMO (fear of losing) in the market. However, as the ETF is based on BTC futures, this type of instrument does not impact the retail BTC price. Furthermore, it is a very difficult product for ordinary investors.

Now that the hype is going down and investors are getting to know the ETF, the price of the BTC tends to retreat.

This is the opinion of the cryptocurrency analyst known as Cred. According to the analyst, Bitcoin could drop to less than $52,000 as the market is overleveraged.

“If we’re going to dive deeper I can’t say for sure. But if that happens, I think we’re going to fall back to a brand between US$44,000 and US$52,000,” he said.

For him, this drop will depend on how the leveraged traders market is positioned. After all, if they are able to buy on the falls, this will insure a bigger pullback in the BTC.

In that sense, he believes that support between $56,000 and $58,000 would be a strong basis for the continuation of the BTC’s rally.

“But in terms of structure trade configurations, its closest configuration is a move below the previous week’s low to the $56,000 to $58,000 support,” he points out.

Bitcoin

Like Cred, Crypto Quant CEO Ki Young Ju also expects some volatility.

the analyst affirmed that the market appears overly leveraged as the BTC’s estimated leverage ratio, which tracks the open interest index divided by an exchange’s reserve, appears to be approaching a new all-time high.

“BTC’s estimated leverage ratio is about to hit a year’s high. It seems obvious that the market is over-leveraged right now. We will see some volatility soon,” he said.

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