Why Bitcoin And Other Cryptocurrencies May Have Fallen Into A Short-Term Correction
A careful look at some of the posts being shared on Twitter indicates that the cryptocurrency market may be on a short-term bearish trend. On Friday and Saturday, prices of altcoins rebounded sharply while the top two cryptos (Bitcoin and Ethereum) were in their consolidation phase. On Sunday, most of the altcoins– from small to large caps were bullish.
While some of them rallied by at least 10%, others rose to as high as 40 to 50% as at the time of writing this report. On Monday, some of the altcoins have had their prices rise to as high as 60%. Nevertheless, some analysts still believe that all the cryptocurrencies, including Bitcoin and Ethereum, are still keeping their uptrend momentum intact.
Is Bitcoin’s bullish market over in the near term?
A crypto analyst, Qiao Wang, states that contrary to the wide speculation, the belief that Bitcoin and other cryptocurrencies are still in their uninterrupted bullish trend may be exaggerated. He said earlier this month that the assets are likely in a “mini-bear market” due to a large number of speculators, which is obvious from the funding rates of the cryptocurrency futures market.
He notes that the market is in a short-term correction and not reasonable to short. He believes that the prices of digital assets will rebound by the middle of the year. He added that he expected the speculators to “go away” while buyers will increase their stake. He has not been able to foresee how long the “mini-bear” direction will last, but he believes that price settling in the range of $20,000 to $25,000 will b unfavorable to both the bulls and the bears.
In the meantime, the market is too fragile; hence, this is why it is susceptible to a possible correction, Wang asserts. He revealed that he is bullish on some DeFi, which has a positive outlook, given his Bitcoin prices analysis. He concluded that any position that you take still comes with a huge risk.
Time to take part of your profit– Guggenheim
Meanwhile, Scott Minerd of Guggenheim funds, which, last year, predicted that Bitcoin will still reach $400K, also believes that there is a “bearish pullback” in Bitcoin’s price in the short term. He advised traders to take part in their profits without delay. He, however, coined the present market condition as “speculative frenzy.” He also noted the sudden increase in the number of retail speculators coming into the system.
This development, he says, Is limiting orders due to the inability of cryptocurrency platforms to meet the increasing demand. Besides, Minerd noted that cryptocurrencies are becoming increasingly popular. He clarified that his prediction of the $400K crypto price is because investors now prefer Bitcoin to gold, shorter in supply. The funding rate is regular payment traders who hold long positions to those who hold short positions or vice versa, depending on the variation between spot prices and perpetual market.
Hence, the open positions will determine those who to pay and those who to receive. The main essence of this rate is to avoid prolonged deviation between the prices of the two positions. The exchange platform computes the funding rate many times in a day. When the rate is high, it indicates a huge number of leveraged buyers trading on a particular asset whose value is rising at least in a short time.