Bitcoin analyst warns ‘huge dump’ amid recovering stablecoin dominance

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As an experienced financial analyst who has navigated through various market cycles and trends, I find myself cautiously bearish on Bitcoin for the short term. The recent decline of 15% following its all-time high is a red flag that shouldn’t be ignored.

Over the past week, Bitcoin has dropped by approximately 15% following its peak of roughly $108,365 (as indicated by Bitstamp data). There’s potential for this digital currency to drop even more in the upcoming weeks because the Tether market is showing signs of strong recovery.

Tether dominance signals “huge dump” in Bitcoin markets

As suggested by The ForexX Mindset on TradingView, it’s possible that the price of Bitcoin (BTC) could experience a significant drop, as its value tends to decrease when the USDT Dominance Index (USDT.D), which reflects Tether’s (USDT) share in the total cryptocurrency market, increases.

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Remarkably, the USDT.D indicator demonstrates strong indications of a substantial recovery following its dip to support levels last observed in March. Previously, USDT.D experienced a sharp bounce back from comparable support around the 3.80% mark, which corresponded with Bitcoin reaching approximately $73,800 as its local peak.

Based on the recent market trend, it seems that investors are moving their funds towards Tether due to a perceived rise in market instability or negative pressure. In the perspective of ForexX Mindset, this pattern might indicate further drops in Bitcoin value, encouraging traders to disregard temporary price increases and focus on long-term strategies instead.

As an analyst, I anticipate a significant surge in prices, often referred to as a ‘pump.’ This sudden increase could potentially mislead observers into believing that the market is on the brink of a massive upward trend.

“But don’t trust it. This is a trap. Right after that spike, a huge dump is coming, and anyone who jumps in too soon could get wiped out.”

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Initially, Bitcoin experienced a slight rebound following its December low of approximately $92,120, and by December 27th, it reached a peak close to $96,740, indicating a somewhat pessimistic perspective had arisen.

However, according to the ForexX Mindset, this recovery could create an “institutional ambush.”

Warnings have been issued about the possibility of experts manipulating Bitcoin prices by artificially inflating them, luring unsuspecting individual investors, who then sell when prices peak. This action leaves these retail traders bearing substantial losses while the initial holders cash out.

Bitcoin bears eye $81,500 in January

Bitcoin has dipped following its inability to surpass the projected peak around $102,734, which corresponds to the 1.618 Fibonacci extension level.

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The retreat occurs when the weekly Relative Strength Index (RSI) exceeds the overbought zone and displays a negative divergence compared to prices making successive peaks, which is often an indication that the bullish energy is starting to weaken.

At approximately $96,000 right now, Bitcoin might head towards its potential downside target, which is around $81,500 if the correction continues, given by the 20-week exponential moving average (EMA). A more significant drop could lead Bitcoin back to the 50-week EMA at about $67,700, a level that coincides with the 1.0 Fibonacci retracement and serves as another potential support level.

In the meantime, some experts suggest that the 1.618 Fibonacci level might serve as a supportive base, potentially propelling Bitcoin’s price to reach an unprecedented high of $150,000 by the first half of 2025 – a prediction initially made by several analysts earlier on.

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2024-12-27 15:30