Bitcoin (BTC) has been on a rollercoaster ride recently, with prices soaring above $68,000. However, crypto analyst Justin Bennett is warning investors not to get too excited just yet. In a recent social media post, Bennett cautioned that the current rally may not be sustainable due to weak spot market volume and speculation driving the price up.
Bennett pointed out that while the price of BTC is rising, the rally is largely driven by perpetual futures trading and open interest reaching levels not seen since late July. He emphasized the importance of caution for traders, especially with conflicting data in the market.
One key metric to watch, according to Bennett, is open interest. A spike in open interest could lead to a leverage flush, where overleveraged traders are forced to liquidate their positions, potentially triggering a correction in the market.
In order to avoid a potential correction, BTC bulls will need to hold the $68,200 support level. Bennett highlighted the fact that whales (large holders of BTC) are holding steady compared to retail investors, but spot traders have not been active in the market recently. This has raised concerns about the sustainability of the current rally.
On the flip side, Bennett also pointed out a potentially bullish sign for Bitcoin and altcoins. He noted that USDT dominance, which tracks the market cap share of the stablecoin USDT, recently broke below two support levels. A bearish USDT dominance chart is typically seen as positive for cryptocurrencies, as it suggests that traders are using stablecoins to accumulate crypto assets.
At the time of writing, Bitcoin is trading at $68,241. Bennett highlighted the importance of monitoring USDT dominance, which could signal a 20% rally for BTC if it breaks below key support levels.
In conclusion, while Bitcoin may be on the verge of new all-time highs, investors should proceed with caution. The market is displaying mixed signals, and it is essential to closely monitor key metrics like open interest and USDT dominance to assess the sustainability of the current rally. Stay informed and stay vigilant in this fast-moving crypto market.