Is Bitcoin’s Rally Doomed? Experts Raise Concerns About Sustainability
Is Bitcoin’s Bull Run Running Out of Steam?
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Bitcoin experienced a surge in price last week, reaching highs not seen since July. While the cryptocurrency is celebrating impressive gains, some analysts are raising concerns about the sustainability of this rally.
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What’s Fueling the Doubts?
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CryptoQuant analyst Wenry highlights several key factors that could be hindering Bitcoin’s long-term upward trajectory. These include:
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- Lack of Retail Interest: The analyst notes that there’s been a lack of engagement from retail investors in key markets like Korea and the US, as indicated by stagnant taker volume. This is a significant departure from previous Bitcoin rallies, where retail participation was a driving force.
- High Open Interest, Low Spot Volume: Wenry points out a high level of Open Interest in the Bitcoin market, coupled with low spot volume. This suggests a lack of significant buying pressure despite the ongoing rally, pointing to consolidation rather than a sustained market shift.
- Derivative-Driven Surge: The current price gain could be largely attributed to derivatives trading fueled by macroeconomic factors like interest rate reductions. This lack of strong spot market support suggests the rally might be a temporary spike rather than a long-term trend.
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If retail investors continue to remain on the sidelines, Bitcoin could face challenges in maintaining its momentum and might even experience a price correction.
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Other Perspectives
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While Wenry expresses caution, some analysts remain optimistic. Popular analyst Michaël van de Poppe predicts Bitcoin surpassing its all-time high of $73,750 in the last quarter of 2024, following a similar trajectory with gold. He also anticipates significant price gains for altcoins during the same period.
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The Bottom Line
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The future of Bitcoin’s rally remains uncertain. While some indicators point to a potential slowdown, others suggest a continued upward trend. Only time will tell whether the current surge is a temporary blip or a harbinger of sustained growth.