As a seasoned analyst with over two decades of experience in financial markets, I’ve seen my fair share of bubbles and corrections. The current parabolic rally in the cryptocurrency market is reminiscent of some past scenarios that ended with a correction. The Crypto Fear & Greed Index hitting 80, or “extreme greed,” is a red flag that should not be ignored.
In simpler terms, the prices for cryptocurrencies are rapidly increasing during this steep upward trend, leading some experts to predict a potential reduction in outstanding loans or positions (deleveraging) before another price surge occurs.
On November 12th, the feeling among crypto investors soared to 80, which is equivalent to “extreme greed,” following Bitcoin’s (BTC) price reaching an all-time high of $85,000 on November 11th, as per data from the Crypto Fear & Greed Index provided by alternative.me.
Previously, on April 9th, the index reached a score of 80, only for Bitcoin to experience a significant drop of approximately 18% over the subsequent three weeks, as per Bitstamp records. This decline brought the price down from more than $69,135 to above $56,500 on May 1st.
Although there may be some cautionary signs, the majority of financial analysts remain optimistic about Bitcoin’s future price trend up until 2025.
On November 12th, Bitcoin neared a record high of $90,000. This remarkable surge marked its strongest weekly increase since the US banking crisis in 2023, during which it accrued approximately $413 billion to its total market value over the past seven days.
Bitcoin needs deleveraging before reaching $100,000
Kris Marszalek, the co-founder and CEO of Crypto.com, cautioned that the increasing levels at which borrowed funds are being used for trading positions through leveraged ratios could become untenable.
Marszalek wrote in a Nov. 12 X post:
“Leverage needs to be cleaned up before attack on $100k. Please manage your risk carefully.”
The estimated leverage on Bitcoin, as observed across various crypto exchanges, reached a level of 0.217. This is the highest it’s been in over a year, with similar figures last seen in October 2023, according to data from CryptoQuant.
Investors should brace for volatility ahead of more Bitcoin upside
Given the recent election results with Donald Trump as president, experts like Shunyet Jan, Head of Derivatives at Bybit, advise investors to proceed with care. However, there’s a likelihood that Trump’s presidency could boost Bitcoin’s ongoing price growth, as suggested in his conversation with CryptoMoon.
“Elevated funding rates and a bullish options skew suggest that both retail and institutional investors are eagerly positioning to capture further upside, with many leveraging their positions. The high funding rates, in particular, underscore the level of leveraged bets, reflecting strong demand for long exposure as confidence continues to build.
Certain analysts predict that Bitcoin could surpass the previous high of $100,000 this year, fueled primarily by anticipated enhancements in overall economic conditions following Donald Trump’s presidency.
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2024-11-12 16:17