- The DMI indicator shows Bitcoin is overheated, similar to when it topped out in mid-2019, suggesting a 30% pullback to around $30,000 is possible.
- Opinions are mixed on what’s next, with some pointing to high funding rates as a sign of exuberant sentiment often preceding declines, while others say rates remain reasonable.
- While impressive gains have occurred, historical data indicates a temporary pullback may happen before the uptrend resumes, but uncertainty persists around timing and severity.
The directional movement index (DMI), a popular momentum indicator, has entered levels that in the past have accompanied trend reversals. Readings are similar to those seen in mid-2019 when Bitcoin topped out for that cycle.
According to commentator CryptoCon, this suggests Bitcoin may be due for a cooldown after its recent gains. He estimates a 30% pullback is possible, which would mean a decline to around $30,000 from current levels.
Mixed opinions on what’s next
Some analysts point to high funding rates on futures contracts as a sign of overly exuberant sentiment that often precedes declines.
However, others note funding rates remain reasonable compared to past cycle peaks. There is debate around whether more upside is possible first, potentially to $48,000, before any correction takes hold.
Conclusion
While Bitcoin has seen impressive gains lately, historical data suggests a temporary pullback may occur before the uptrend resumes. Analyst estimates for the depth of such a correction range from 30% to less severe scenarios. Market indicators present a mixed picture, and uncertainty persists around the exact timing and severity of any cooldown. Going forward, Bitcoin may continue to experience volatility as the market seeks to determine a bottom following the recent rally.
