Bitcoin spot rates might be dropping sharply. Unfazed, one analyst believes that the currency would recover its losses and rise sharply before peaking in December 2024. Based on the structure in the daily chart, BTC is down about 11% from 2024 high at spot pricing and is not creating enough purchasing pressure.
Will History Support Bitcoin And Rally To Fresh Highs?
Using X, the analyst uses the 2-week Fisher Transform indicator to highlight past price patterns. This tool can be used to identify possible reversal zones, such as double tops or bottoms. The technical indicator has a latency but has previously identified peaks with accuracy.
When Bitcoin reached a high of over $69,000 in 2021, the Fisher Transfer indicator printed a signal that indicated possible peaks. Prices plummeted in the weeks that followed this indication.
Due in large part to the failure of FTX and the bankruptcies of numerous other well-known cryptocurrency hedge funds, notably Three Arrow Capital (3AC), Bitcoin dropped as low as $16,000 by the end of 2022.
The significance of the indicator in distinguishing between a possible single peak later this year and a double top that would replicate 2017 and 2021 is also emphasized by the expert.
The trader stated that prices are currently getting close to 2017 levels. Prices then experienced a “more subtle initial rise,” according to the researcher, before reaching a peak of more than $20,000 six months later.
If this continues and the indicator “pauses” at its current position, Bitcoin is probably going to record a “single top.” But the location of this peak will only become clear with time.
Hedge Funds Were Selling At Tops?
This forecast coincides with large bearish wagers made by leveraged hedge funds. According to data from the Commodities Futures Trading Commission (CFTC) of the United States, by last week, these funds had record “short” positions in Bitcoin futures contracts.
With more over 16,000 contracts, observers remark that this was the highest short position since 2017. They anticipated a price dump when they shorted, and that’s exactly what’s happening at spot rates.
Still, another expert responded to the trend by stating that the futures premium remained substantial, despite hedge funds being short. Some of these cryptocurrency hedge funds are making use of this development.
As positive economic data began to flow in and US Federal Reserve officials seemed hawkish, the number of short positions could rise in the coming days. The Federal Reserve, a data-driven central bank, may decide not to cut rates as quickly as first anticipated.