In a stark warning to cryptocurrency investors, leading analysts predict a possible Bitcoin correction of up to 80% in the next bear market, driven by significant selling pressure from Bitcoin treasury companies.
This projection comes in the wake of recent market trends and the historical performance of Bitcoin during downturns.
Pseudonymous crypto strategist DonAlt, who accurately forecasted the 2022 Bitcoin bottom, has raised alarms about the impact of Bitcoin treasury companies on market stability.
According to data from BitcoinTreasuries, these entities currently hold over 1.1 million BTC, valued at approximately $117 billion.
DonAlt asserts, “The selling from these treasury companies will create an unprecedented level of volatility, potentially mirroring the catastrophic decline seen in 2018 when Bitcoin plummeted from $20,000 to $3,000.”
The cryptocurrency market is notorious for its volatility, and past performance suggests that major corrections often follow significant price rallies.
Analysts indicate that if Bitcoin reaches new highs in this cycle, corrections of 70-80% are not only possible but probable.
“Whatever the peak price is, a correction of this magnitude would reset expectations across the market,” DonAlt emphasizes.
Also Read: Bitcoin Price Discovery: $190K Is Possible Without A Doubt, Per Analyst
Current Market Dynamics
As of now, Bitcoin is trading at approximately $107,856.
Analysts highlight that a drop below the crucial support level of $101,000 could trigger a rapid decline to as low as $89,000.
“Should we breach that key support, we might witness a swift reaction from the market,” warns another expert, echoing DonAlt’s sentiments.
Despite these bearish predictions, some analysts remain bullish in the short term, suggesting that current price levels could still present buying opportunities.
“In the near term, Bitcoin could see upward momentum before any significant corrections occur, particularly if institutional interest continues,” one analyst noted.
With the looming threat of a bear market, experts advise investors to exercise caution.
Diversification and risk management strategies are essential as the market approaches potential highs.
“Investors should be prepared for volatility, and it’s crucial to have a plan in place to mitigate risks associated with large market corrections,” a financial advisor cautioned.
As Bitcoin navigates its current trajectory, the warnings from analysts serve as a crucial reminder for investors to stay informed and vigilant.
The potential for an 80% correction underscores the importance of due diligence in the ever-changing landscape of cryptocurrency investment.
As always, investors should proceed with caution and be prepared for the unpredictable nature of the market.
But I’m curious to know what you think — leave your thoughts below.
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