Despite Bitcoin’s recent surge above $68,000, a prominent crypto analyst is cautioning that the cryptocurrency might not yet be ready for takeoff. Justin Bennett, a closely followed figure in the crypto space, urged his 133,400 followers on X to approach the recent rally with caution. He pointed out that Bitcoin’s price movements are giving mixed signals, and the rise seems largely driven by speculators. Bennett also highlighted weak spot market trading volumes, suggesting that the recent price action may not indicate a sustainable uptrend.

Caution Needed for Bitcoin’s Recent Rally

Bitcoin’s breakout from a seven-month narrow trading range, particularly in low-volume weekend trading, is a phenomenon worth watching. Bennett summed up his concerns with the following statement:

“People are celebrating a Bitcoin breakout on a low-volume Friday. But neither the day nor the week is over yet. Much of this rally is being driven by perpetual futures, and open interest (OI) has returned to its July peak. I’m not making any definitive calls yet because the data is conflicting. But as a trader, there’s no harm in being cautious at this point.”

$68,200 is the level $BTC needs to break and hold. Do that, and we could finally see #Bitcoin take out some highs.

Failing to hold that mark would be bearish.

Pay attention to the daily and weekly closing prices. Intraday closes won’t matter as much when dealing with… pic.twitter.com/IGDCOrPIYb

— Justin Bennett (@JustinBennettFX) October 18, 2024

Open Interest (OI) tracks the total number of outstanding derivative contracts for a given asset. Sudden spikes in OI can lead to deep corrections, as overly leveraged traders may be forced to liquidate their positions. Bennett notes that Bitcoin bulls must defend the $68,200 level to avoid an inevitable correction.

What Should Investors Do?

Bennett pointed out that last week saw some strange movements in the crypto market. Whales (large Bitcoin holders) have remained relatively stable compared to smaller traders, while spot market activity has been limited. He believes that much of the recent rally has been driven by futures trading, which is often not a sign of a healthy market.

The crypto strategist emphasized that Bitcoin’s reaction at the $68,200 level is more important than conflicting data. Should the price dip below this level, a more serious correction could follow. Currently, Bitcoin is trading at $68,241, but if it fails to maintain this price level, Bennett expects a significant short-term correction.

Analyst Warns: Prepare for a 'Strange' Week for Bitcoin! = The Bit Journal

Tether (USDT) Dominance: A Positive Sign for BTC

Bennett also pointed to a potentially bullish signal for Bitcoin: the recent decline in Tether’s (USDT) market dominance, which has fallen below two key support levels. USDT dominance (USDT.D) tracks the share of the total crypto market cap represented by Tether. Declines in USDT.D are typically seen as a bullish signal for Bitcoin and altcoins, as it indicates that traders are using their stablecoins to purchase crypto assets.

Bennett predicts that if USDT dominance continues to decline, Bitcoin could rally by as much as 20%. According to his analysis, this trend shows that investors are moving out of stablecoins and into Bitcoin and other crypto assets, creating the potential for a significant short-term rally.

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