While many are optimistic about Bitcoin reaching new all-time highs, one analyst is making a contrary prediction of a significant downturn. This forecast suggests Bitcoin could drop below the $100,000 mark, which many thought was a thing of the past, and may experience a plunge of over 60% from current levels. The analysis indicates a potential flash crash, hinting at a price reversal to levels not seen in several years.
Entering A Bitcoin Short With Conviction
The crypto analyst known as Dick Dandy shared their strategy of initiating a Bitcoin short position between $121,400 and $121,700. However, what stands out are the take-profit targets that Dandy has established for this position.
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The first target is set at $105,700, extending down to $85,800. From that point, the analyst predicts the Bitcoin price to continue its decline until it falls below $50,000, reaching levels not observed since 2024. A drop to the $43,900 target would result in a decline exceeding 60%, but the analyst anticipates even further drops.
Despite the potential for a rebound from $35,000, the analyst plans to establish a long position to hedge their short while maintaining a belief that Bitcoin’s price will keep falling. Ultimately, Dandy forecasts that Bitcoin could reach a low of $10,000, marking the endpoint of this prediction.
Anatomy Of The Crash Explained In Theory
In a separate post, Dandy clarified their theory regarding the potential flash crash of Bitcoin, which they attribute to a conflict between traders and market makers. According to the analyst, market makers provide liquidity that allows traders to enter leveraged positions, but ultimately aim to reclaim their funds while ensuring traders don’t profit off their trades.
This scenario can lead to swift price changes, commonly referred to as “stop hunts.” These occurrences aim to force many traders out of their positions rapidly by liquidating them, essentially returning liquidity to the market makers and more.
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Regarding the likelihood of such a drastic move, the analyst points out that a significant portion of Bitcoin’s market cap consists of liquidity used for leveraged and derivatives trading. They even assert that the “floor price” for Bitcoin hovers around $8,000, factoring in stable sources and dividing it by the “dispersed amount of Bitcoin on the market.”
Dandy foresees this shift occurring rapidly, hence the term flash crash, emphasizing that traders will have minimal time to react. “The more sell orders there are, along with the greater volume of Bitcoin being sold, the quicker the price will drop,” the analyst stated.
Featured image from Dall.E, chart from TradingView.com
