A closely watched cryptocurrency analyst warns that despite Bitcoin (BTC) rallying above $68,000, there is no room for it to take off.
Cryptocurrency strategist Justin Bennett tells his 133,400 followers on social media platform .
Although the price of BTC is rising, Bennett warns that the rally may not be sustainable as speculators are fueling the price rally amid low spot market volume.
“People are seeing Bitcoin break out of its 7-month range before the end of the day or week, primarily on Friday (with low volume) when the perpetual futures-driven rally and OI (open interest) returned to previous levels. Celebrating what happened.The peak in late July.
I'm not going to make any bold predictions as the data is conflicting at this point, but if you're a trader, it's perfectly fine to be cautious here.”
Open interest is a metric that tracks the total number of outstanding derivative contracts for a particular asset. The spike in OI puts bullish assets in a position to witness a leverage flush, wiping out overleveraged traders and leading to a deeper corrective move.
According to Bennett, BTC bulls need to hold $68,200 to avoid a potential correction.
“It's been a strange week, to be honest.
On the other hand, whales are more stable than retail.
Meanwhile, spot traders have not participated much since Monday. This is primarily a criminal-driven rally and is usually not healthy.
We will see how this all plays out, but the immediate focus is on how BTC reacts to $68,200 rather than data discrepancies. ”
At the time of this writing, Bitcoin is trading at $68,241.
Looking at USDT's dominance (USDT.D), Bennett points out that the chart has recently broken below two support levels. USDT.D tracks how much of the cryptocurrency market capitalization belongs to the top stablecoin USDT. USDT.D's bearish chart has traditionally been interpreted as bullish for Bitcoin and altcoins, as it suggests traders are using stablecoins to accumulate crypto assets.
Bennett says,
“Tether’s dominance has trended inversely to Bitcoin, and it is doing well.
It is currently just below the confluence of the 5.26% support lines.
A sustained break below could result in a breakout of recent lows and a breakout of the 2018 trend line.
This could more or less equate to a 20% rise from BTC. ”
At the time of writing, USDT.D is trading at 5.24%, still below the trader's support area.
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