Bitcoin has taken a significant hit in the past week, declining by 15% from its record high of around $108,365, according to data from Bitstamp. The cryptocurrency’s price may continue to drop further in the coming weeks due to a sharp recovery in Tether market dominance.
Tether Dominance Signals ‘Huge Dump’ in Bitcoin Markets
According to TradingView contributor, The ForexX Mindset, the Bitcoin price may witness a "huge dump" due to its negative correlation with the USDT Dominance Index (USDT.D). The USDT.D metric measures Tether’s share in the overall cryptocurrency market and shows signs of a significant rebound after hitting support levels last seen in March.
Understanding the Relationship Between Bitcoin and Tether
The ForexX Mindset highlights that when Tether dominance increases, it often indicates a flight to safety as traders shift capital into stablecoins like USDT. This can be due to increased market volatility or downside pressure, leading to a decrease in Bitcoin prices. The analyst warns that this rebound in Tether dominance could signal a "huge dump" in Bitcoin markets.
The Analyst’s Bearish Outlook
The ForexX Mindset emphasizes the importance of not getting caught up in short-term price gains. Instead, traders should focus on the bigger picture and be aware of potential pitfalls. The analyst warns that dark pools and whales may deliberately pump Bitcoin prices to attract retail traders, only to offload their holdings at local highs, leaving smaller investors to shoulder considerable losses.
BTC/USD Weekly Performance Chart
USDT.D vs. BTC/USD weekly performance chart:
[Image: USDT.D vs. BTC/USD weekly performance chart](https://www.tradingview.com/chart/)
Rebound in Tether Dominance
The rebound in Tether dominance is a concerning signal for Bitcoin investors. The ForexX Mindset notes that similar support levels were seen in March, which coincided with Bitcoin reaching a local top of around $73,800.
BTC/USD and USDT.D Weekly Performance Comparison
BTC/USD vs. USDT.D weekly performance comparison:
[Image: BTC/USD vs. USDT.D weekly performance comparison](https://www.tradingview.com/chart/)
The Analyst’s Warning
The ForexX Mindset emphasizes that the current price action in Bitcoin may be a "trap" for investors. The analyst warns of a potential sharp spike in price followed by a significant drop, which could wipe out retail traders who jump in too soon.
Bitcoin Bears Eye $81,500 in January
Bitcoin is currently experiencing a correction after failing to break above the 1.618 Fibonacci extension level near $102,734. The pullback comes as the weekly relative strength index (RSI) enters overbought territory while showing bearish divergence with respect to its prices forming higher highs.
BTC/USD Weekly Price Chart
BTC/USD weekly price chart:
[Image: BTC/USD weekly price chart](https://www.tradingview.com/chart/)
Next Downside Targets for Bitcoin
The next downside target for Bitcoin could be the 20-week exponential moving average (EMA) around $81,500 if the correction deepens. A further decline could see Bitcoin retesting the 50-week EMA near $67,700, which aligns with the 1.0 Fibonacci retracement level.
Potential Price Targets for Bitcoin
A reclaiming of the 1.618 Fib line as support could enable a Bitcoin price rally toward $150,000 by the first half of 2025, a target predicted earlier by multiple analysts.
Investor Warning
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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