Brace Yourself: Expert Predicts Potential Drop for Bitcoin as Market Cools Down
In January 2021, Bitcoin’s price began an unprecedented climb towards its all-time high, hitting record high after record high with every dip being bought up quickly. While it may seem like the rally will continue indefinitely, experts warn that a cool-off period could be imminent.
Analysts at Swissblock, a digital asset analytics firm, have noted that Bitcoin is showing signs of waning momentum. In a note released on Wednesday, they highlighted a negative divergence between Bitcoin’s price and the Relative Strength Index (RSI) on the 4-hour chart. This bearish divergence suggests that lower prices may be on the horizon.
In fact, Swissblock analysts predict that Bitcoin could drop as much as 20% from its current price in the near-term. However, they reassured investors that this would only be a temporary setback before the uptrend continues to new highs.
Henrik Zeberg, a senior analyst at Swissblock, created a chart that predicts a pullback could happen within the next few days. But he also believes that, in the grand scheme of things, Bitcoin’s price will continue to rise. “We see BTC dropping to $58,000-$59,000 in the next move,” he said, referring to the potential 20% decline from current prices.
Other experts are also warning of a possible consolidation period for Bitcoin. Matrixport, a crypto investment services firm, noted on Tuesday that the rally may be running out of fuel. They pointed to a declining RSI and high Bitcoin prices as a sign that a consolidation period may be needed before the uptrend resumes.
In addition to technical indicators, skyrocketing meme coin prices could also be a signal of an impending pullback. As seen in the past with other riskier tokens, large-cap cryptos tend to see a decline once profits are rotated to riskier options. For example, last May’s breakneck rally of Pepe coin foreshadowed a 15% decline in Bitcoin’s price the following month.
At the time of writing, Bitcoin’s price sits slightly above $73,000, up 2.6% in the past 24 hours. The broader crypto market seems to be following suit, with the Coindesk 20 Index (CD20) also seeing a 4% increase. However, experts caution that investors should remain vigilant and brace for a potential cool-off period in the near future as Bitcoin’s unprecedented rally continues.
