Amid calls for new all-time highs for Bitcoin, one analyst is bucking the trend and calling it a crash. The forecast not only expects Bitcoin to break below the $100,000 level, which many believe has already been the case in the past, but to drop by more than 60% from here on out. The analysis, which depicts a sudden crash, shows a possible price reversal to levels not seen in years.
Enter a Bitcoin Short with conviction
The crypto analyst under the pseudonym Dick Dandy revealed that their next step was to enter into a Bitcoin short position between $121,400 and $121,700. The more interesting part, however, is the take-profit goals Dandy has set for this position.
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The first of these is at the $105,700 level and goes all the way down to $85,800. From here, the crypto analyst expects the Bitcoin price continues to fall until it drops below $50,000 and records prices not seen since 2024. A drop to the $43,900 target would mean a price drop of more than 60%, but the analyst expects Bitcoin to crash further.
With the possibility of Bitcoin recovering from $35,000, the analyst explains that they plan to open a long position to cover their short position. But continues to believe in the fact that Bitcoin price will continue to fall. Ultimately, Dandy believes that the Bitcoin price will eventually reach $10,000, which is the end of the target.
Anatomy of the crash explained in theory
In another post, Dandy explained the theory behind the Bitcoin flash crash is primarily a battle between traders and market makers. According to the analyst, market makers essentially allow crypto traders to use liquidity to enter leveraged positions. But ultimately they want their money back and ensure that traders do not profit from their trades.
Such cases lead to rapid price movements, which have become known in the market as ‘stop hunts’. These work in reverse taking a large number of traders out of their positions very quickly by liquidating them, returning liquidity, and then some, to the market makers.
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As for why such a big step is possiblethe analyst explains that this is because most of Bitcoin’s market capitalization consists of liquidity used for leverage and derivatives trading. In fact, the analyst believes that Bitcoin’s “floor price” is around $8,000, taking into account stable resources and dividing by the “spread amount of Bitcoin in the market.”
Dandy predicts that this move will happen very quickly and therefore calls it a flash crash, and that traders will have very little time to react. “The more sell orders there are, and the greater the amount of Bitcoin that needs to be sold, the faster the price will fall,” the analyst explained.
Featured image of Dall.E, chart from TradingView.com