A closely followed crypto analyst is warning that Bitcoin (BTC) is not cleared for takeoff despite rallying above $68,000.
Crypto strategist Justin Bennett tells his 133,400 followers on the social media platform X that Bitcoin is flashing mixed signals as BTC threatens to surge to new all-time highs.
While BTC’s price is rising, Bennett warns that the rally may not be sustainable as it is being fueled by speculators amid weak spot market volume.
“People are celebrating a Bitcoin breakout from a seven-month range on a Friday (low volume) before the day or week has even closed, within a rally that is largely perpetual futures-driven and OI (open interest) that is back at its late July peak.
I’m not going to make any bold predictions because the data is conflicting at the moment, but if you’re a trader, there’s absolutely nothing wrong with being cautious here.”
Open interest is a metric that tracks the total number of outstanding derivatives contracts for a given asset. A spiking OI puts a bullish asset in a position to witness a leverage flush where overleveraged traders are wiped out, leading to a deeper corrective move.
According to Bennett, BTC bulls must hold $68,200 to avoid a potential correction.
“It’s been a strange week, to be honest.
On the one hand, whales are holding steady compared to retail.
On the other hand, spot traders haven’t participated much since Monday. It’s been primarily a perp-driven rally, which isn’t usually healthy.
We’ll see how all of this pans out, but how BTC reacts to $68,200 is the more immediate focus rather than the conflicting data.”
Source: Justin Bennett/X
At time of writing, Bitcoin is trading for $68,241.
Looking at USDT dominance (USDT.D), Bennett notes that the chart recently broke below two support levels. USDT.D tracks how much of the crypto market cap belongs to the top stablecoin USDT. A bearish USDT.D chart is traditionally interpreted as bullish for Bitcoin and altcoins as it suggests that traders are using their stablecoins to accumulate crypto assets.
Says Bennett,
“Tether dominance, which moves inversely to Bitcoin, is tracking nicely.
Currently just below a confluence of support at 5.26%.
A sustained break below would open up recent lows and potentially the 2018 trend line.
That could equal a 20% rally from BTC, give or take.”
Source: Justin Bennett/X
At time of writing, USDT.D is hovering at 5.24%, still below the trader’s support areas.
Generated Image: DALLE3
