Bitcoin’s parabolic rise is much higher than its historical high, which triggered several déjàvu events in 2017. Many analysts worry that the market is too late to make major adjustments.
On January 8, Bitcoin (BTC) reached a record high of $41,940. As professionals and individual investors are worried about the imminent change, the price fell 28% this week to $31,076.
Bitcoin’s historical data shows that a rapid parabolic rebound is usually accompanied by a catastrophic correction, just like the bullish rebound in 2017. Therefore, the similarities between the current market and the booming mania of 2017-2018 have not caught people’s attention.
Timothy Peterson, Global Chief Investment Director of Cany Island, recently pointed out:
“Bitcoin’s risk is close to 2017 levels. Investors who buy at this price may lose 40% of their investment at some point in the future. However, the maximum typical drop is 30%, so the risk is slightly higher than average .”
Bitcoin risk depends on the current valuation level. Source: Twitter
In a subsequent private conversation with Cointelegraph, Peterson pointed out that Bitcoin still has a short-term bull market:
“To make Bitcoin’s valuation reach the 2017 level, it needs to reach at least $80,000. This will almost never happen, and if it does happen, it will happen soon. Higher prices tend to increase even more. many.”
Bladder split or lower support re-examination?
There is evidence that Bitcoin’s rapid rise reflects the market’s obsession to prepare for corrections, while the current debate between bulls and bears focuses on whether this week’s volatility is a healthy correction, and that the price should start the next test low Support level. Unity. .
Philip Swift, the founder and endless analyst of LookIntoBitcoin, claimed that Preenet’s Bitcoin price movement reflected a “harmful pullback/slowdown” and pointed out that multiple indicators flashed red, indicating that the rate of BTC price appreciation is extreme.
“The price is now falling below the x3 multiplier again, because I think the price will continue for a while. As others have pointed out, the price is about 3 times (greater than 2 times) because we are in the previous crazy phase of the cycle , While retail and institutions are buying, which was the case in the previous cycle.”
Swift’s analysis shows that BTC may trade sideways and rise slowly in the short term, but the pace is slower “due to the conversion of some currencies/profits to other currencies”. The recent price movements of altcoins, especially those associated with DeFi, suggest that this kind of rotation may already be underway.
BTC police is not over yet
Just as analysts and chart observers urged Bitcoin to take a breather, rookie traders may have stated that they have other plans. The bulls this week defended the retest of the lower support level several times by buying each drop, and also expect that after Grayscale reopens the GBTC product range, institutional funds flowing to BTC will resume.
By looking at the daily 30-day average sentiment value of Bitcoin, it can be seen that although it has declined, the average value is only slightly lower than the recent high, and is much higher than the previous downturn low.
Price comparison with 30-day average sentiment. Source: TheTIE
Although few people know exactly how the price of Bitcoin will fluctuate this weekend, technically stronger fundamentals, increasing institutional flows, and active announcements by government regulators indicate that the recent recession is nothing more than a healthy adjustment. It will inevitably happen before the Bitcoin Corridor reaches new levels. . Absolutely high.
The views expressed are only those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and transaction step is related to risk. When making a decision, you must conduct your own research.