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Bitcoin Analyst Warns of Huge Dump Amid Recovering Stablecoin Dominance

January 23, 2025February 6, 2025 EquityExplained

After setting a record high of around $108,365, Bitcoin has declined by 15% in the past week, according to data from Bitstamp. The cryptocurrency may continue to fall in the coming weeks due to a sharp recovery in Tether’s market dominance.

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Tether Dominance Signals ‘Huge Dump’ in Bitcoin Markets

The ForexX Mindset contributor on TradingView believes that the Bitcoin price may witness a significant decline due to its negative correlation with the USDT Dominance Index (USDT.D), which measures Tether’s share in the overall cryptocurrency market. The USDT.D metric shows signs of a significant rebound after hitting support levels last seen in March.

The Connection Between Bitcoin and Tether

The ForexX Mindset points out that when the USDT.D index rebounds, it often signifies a flight to safety as traders shift capital into Tether, anticipating increased market volatility or downside pressure. This correlation suggests that the recent recovery in Tether’s dominance may be a precursor to a significant decline in Bitcoin prices.

A "Huge Dump" Ahead?

The ForexX Mindset warns that despite short-term price gains, the bearish outlook for Bitcoin remains intact. The analyst believes that institutional traders and whales may deliberately pump up the price to attract retail investors, only to offload their holdings at local highs, leaving smaller investors to shoulder considerable losses.

"We’ll probably see a sharp spike in price — that’s the pump — which might fool people into thinking the market is about to take off. 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."

Bitcoin Bears Eye $81,500 in January

The recent correction in Bitcoin prices comes as the cryptocurrency fails to break above the 1.618 Fibonacci extension level near $102,734. The pullback has pushed the weekly relative strength index (RSI) into overbought territory, while showing bearish divergence with respect to its prices forming higher highs.

Downside Targets for Bitcoin

If the correction deepens, Bitcoin’s next downside target could be the 20-week exponential moving average (EMA) around $81,500. A further decline could see Bitcoin retesting the 50-week EMA near $67,700, which aligns with the 1.0 Fibonacci retracement level.

A Record-High Target: $150,000

However, some analysts predict that a rally toward the 1.618 Fib line could enable a Bitcoin price surge toward $150,000 by the first half of 2025.

Investor Caution Advised

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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