Bitcoin has grown rather quickly in December, reaching a high of over $45,000 for the first time since 2022. This generated momentum for the general market, causing altcoins to also pump, reaching remarkable recovery.
The rally has cooled down since and Bitcoin now trades at just over $43,000, and the general sentiment remains bullish. However, a Bitfinex analyst Jag Kooner believes Bitcoin is bound to face further correction to a lower price.
Kooner said the correction will be driven by selling pressure from short-term holders who are selling to make some quick profits.
“We expect more drawdown if short-term holders and retail leverage continues to play a dominant role in the market and cause a continued pullback on a relatively illiquid holiday season market environment,” Bitfinex Head of Derivatives Jag Kooner told The Block.
He blamed the same set of holders for the recent retracement in the price of the asset. “Short-term holder profits got overheated, which resulted in our current slump,” Kooner said.
Kooner also added that the number one crypto asset by market cap is prone to the risk of a correction once the price crosses over $44,000, as this serves as a profit realization point for medium-term holders.
An Imminent Correction
Kooner’s prediction has received backing from other analysts at Bitfinex who through a previous report said Bitcoin net realized profitability for all holders has been on for 67 straight days.
According to the report, “This is the longest streak of realized profits since the period from October 2020 to February 2021, such streaks usually lead to market corrections in bull markets.”
Also referring to the historical behavior of Bitcoin, the report further stated that the entire crypto market is likely to see a pullback before forging on to new highs by the end of 2024.
“Current bitcoin valuations imply that the market environment is analogous to the period around June 2019 and July 2016, which saw initial dips in price before sustained recoveries. We expected a pullback to occur post bitcoin tagging the $44,000-$45,000 zone and why we expect prices to range further at these prices or pullback instead of an immediate move upwards,” they added.
Though this is contrary to the expectations of many analysts and investors who expect a short-term rally to the psychological $100,000 price early next year, it may not be entirely negative as corrections are a natural part of the crypto market cycle.
An Opportunity to Buy More
While the pullback that is predicted by Kooner may sound scary to some weak hands, for many whales and diamond hand holders, this may be another opportunity to buy more of the asset and wait for the next phase of the price rally, even if it is to come by the end of 2024.
Some analysts have predicted that Bitcoin may hit $180,000 by the end of 2024, but that remains to be seen. However, expecting a correction doesn’t invalidate the prediction which may well come true if there’s sufficient demand.
The same goes for altcoins, since the price of Bitcoin often determines the fate of altcoins. Some like Solana have already forged ahead though, and JP Morgan Analysts say that Ethereum may outdo Bitcoin in 2024.
