If you’re trading Bitcoin, you might want to pump the brakes a bit, because analyst Willy Woo just dropped a cautionary note, warning that risk levels in the current crypto cycle are hitting a peak.
He’s suggesting that profit-taking is on the horizon, so it might be time to tread carefully.
Be careful?
Woo pointed out that while the Bitcoin market sentiment feels super bullish right now, it’s quite important to adopt a more cautious approach.
He referenced his Bitcoin local risk model, which shows risk levels not seen since January 2023. In other words, things could get dumpy.
The Fear and Greed Index, which tracks market sentiment for Bitcoin and other cryptocurrencies, shows the current reading is a “Greed” score of 69, and that’s up 19 points from a neutral score of 50 just days ago.
It seems like everyone is feeling optimistic, but Woo warns that this could lead to some serious profit-taking soon.
After Bitcoin briefly touched $100,000 on January 8, it has since pulled back and is currently trading at around $94,000, a dip of nearly 4% over the past week.
Optimism is good, but…
Not everyone is on the same page as Woo, though, as some analysts are seeing signs of a potential market reversal.
Rekt Capital noted that Bitcoin’s recent 15% drop from its all-time high of $108,000 aligns with patterns from previous cycles, but he believes this retracement could lead to a rebound soon.
Jan3 CEO Samson Mow also dropped his two sats, telling that if you really understand the macro indicators, you’d realize that all these dips are just tricks to lower Bitcoin prices for big players to swoop in and buy at a discount. He’s probably right.
Money talks
The volatility in the past days can be traced back to some macroeconomic news, especially after the U.S. Federal Reserve released December nonfarm payrolls data that exceeded expectations, indicating a stronger labor market. This news has put pressure on risk assets like Bitcoin.
No matter the price fluctuations, many traders remain hopeful about Bitcoin’s future.
The combination of pro-crypto policies expected from the incoming Trump administration and ongoing discussions about Bitcoin ETFs could keep things interesting.
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