CNBC Analyst Warns: “These 3 Factors May Cause Bitcoin Price Retracement”
CNBC analyst Brian Kelly sees three potential signs of a price peak as Bitcoin (BTC) approaches $ 19,000. Both fundamental and technical factors suggest that a retreat may be imminent as the rally is overextended.
Kelly stated that there are three reasons why there is a short-term Bitcoin pullback. These reasons were the altcoin pump, the growth of addresses with high BTC prices, and high financing rates. He said on CNBC on November 25:
“I AM STILL A BITCOIN BULL. IN THE LONG TERM, I WILL BE A BULL FOR THE NEXT 10 YEARS. BUT IF I DID FROM THE LONG-TERM INVESTOR AND I THINK LIKE THE SHORT-TERM HIGH-RISK INVESTMENT FUND TRADER, I HAVE BEEN SEEING THAT REACHING THE SUMMIT IS THE SIGNALS.
Altcoin pump changes things
Altcoins such as XRP and Stellar (XLM) have skyrocketed in recent months. The uptrends were reminiscent of the altcoin craze of January 2018, when BTC began to retreat and altcoins soared.
At its last market peak, Bitcoin faced a strong correction as altcoins soared, and then the entire market collapsed in the following months. Considering that major altcoins have increased by 50% to 100% in recent weeks, Kelly is cautious about the rise in the altcoin market. Kelly used the following statements:
BITCOIN IS SUBJECT TO FOMO MORE THAN OTHER CLASS OF ASSETS IN THE WORLD. WE ARE STARTING TO SEE SPECULATIVE COINS, COINS UNDER 5 DOLLARS BEGIN TO INCREASE 30-40% PER DAY. THESE ARE SHORT AND MEDIUM-TERM SUMMIT ASSETS.
The rise in altcoins is causing major problems in the cryptocurrency market. For example, on November 24, the price of XRP rose by nearly 50 percent, to over $ 0.90 on Coinbase. Demand spiked to a point where Coinbase would temporarily drop, coinciding with the drop in Bitcoin and Ethereum (ETH) prices.
Growth in Bitcoin addresses
Kelly has consistently used Bitcoin’s address growth metric as a way of valuing BTC since 2017. According to the analyst, when address growth does not match the price of BTC, it could mean that BTC is over-priced.
Right now, Kelly said the market will price an address growth of 25% for Bitcoin next month. According to Kelly, this is an alarming sign that could mean the market is overestimating BTC in the near term:WHEN I LOOK AT ADDRESS GROWTH, THE MARKET IS PRICED AS ADDRESS GROWTH OF APPROXIMATELY 25 PERCENT IN THE NEXT 30 DAYS. IMMEDIATING SUCH A LARGE ADDRESS GROWTH IS A WARNING SIGN
Bitcoin futures funding rates are high
Finally, Kelly talked about the increasing financing rates of Bitcoin continuous futures contracts on major exchanges. When the funding rate increases, it is revealed that buyers and long positions dominate the market. This increases the likelihood of a prolonged jam or pullback. The analyst noted:
LASTLY, WE ARE BEGINNING TO SEE THAT THE RETAIL HAS ENTERED THIS MARKET, AND WE SEE THAT THE INTEREST RATES APPLIED TO THE MARGIN ARE MUCH HIGHER. “
Arguments against a local summit at $ 19,000
According to the news in Cointelegraph, however, after the price of Bitcoin fell from $ 19,400 to $ 18,700 in the past two days, the BTC futures funding rate has stabilized. However, although the funding rate is still higher than normal, it hovers around 0.03%. By comparison, at the peak of the last rally, the funding rate in major exchanges remained at 0.18%.
According to the news source, while the market warms less, many addresses easily profit. The combination of the two could allow the rally to continue in the near term. In addition, Google Trends data show that mainstream interest in the ongoing rally is lower than it was three years ago. This shows that the rally is still in its early stages. The popularity of the word “Bitcoin” in Google searches is only 20 percent of the attention seen in late 2017.