The cryptocurrency market remains on edge as veteran trader Peter Brandt warns of a potential 75% correction in Bitcoin’s (BTC) price.
As BTC struggles under macroeconomic pressures, some investors are hopeful that China’s upcoming $283 billion stimulus could provide the market with much-needed relief. Here’s a breakdown of the factors at play.
Peter Brandt’s 75% Correction Warning
Peter Brandt, known for his market predictions, has sounded the alarm for Bitcoin. His analysis is based on a historical trend he calls “market analogues,” where BTC tends to face significant corrections if it fails to reach a new all-time high (ATH) within 30 weeks of its last peak.
As of October 2024, it’s been exactly 30 weeks since Bitcoin’s last ATH. According to Brandt, in previous instances where BTC didn’t break new highs during this period, the coin faced a price drop exceeding 75%.
If history repeats itself, BTC’s current level of around $60,500 could see a sharp decline, potentially dipping to as low as $15,000.
This prediction, while alarming, comes amid a generally bearish sentiment in the market, with concerns about rising inflation and decreased institutional interest in Bitcoin.
U.S. Inflation and Bitcoin ETF Outflows
One of the key drivers of Bitcoin’s recent price pressure is the higher-than-expected U.S. inflation data.
September’s Consumer Price Index (CPI) revealed inflation increasing by 0.2%, surpassing analysts’ predictions and sparking fears that the Federal Reserve may continue its hawkish monetary policies. These inflation concerns have spooked investors, leading to a flight from riskier assets like Bitcoin.
Adding to this negative outlook, spot Bitcoin ETFs have experienced three consecutive days of outflows, signalling waning institutional interest.
Institutional investors, who had been a crucial driver of Bitcoin’s price surge in the past few years, are now reconsidering their exposure to BTC amidst broader macroeconomic uncertainty.
This shift away from Bitcoin ETFs has only added fuel to the bearish fire, casting doubt on Bitcoin’s short-term price stability.
China’s $283 Billion Stimulus: A Possible Lifeline?
While the U.S. economic outlook weighs heavily on Bitcoin, some investors are turning their attention to China’s anticipated $283 billion economic stimulus.
Expected to be announced soon, this stimulus package aims to boost China’s faltering economy by injecting liquidity into critical sectors like infrastructure and consumer spending.
There’s hope that a stimulus of this magnitude could trickle into global financial markets, providing a lift to cryptocurrencies like Bitcoin.
Historically, Chinese demand has been a significant driver in the crypto markets, and an influx of liquidity from China could help counterbalance the current bearish sentiment.
However, it’s unclear how much impact the stimulus will have on Bitcoin, especially given China’s complicated relationship with cryptocurrencies.
While Chinese investors have found ways to participate in global markets, regulatory crackdowns on crypto trading within the country could limit the stimulus’ positive effects on Bitcoin’s price.
Conclusion
As of now, Bitcoin finds itself in a precarious position. Peter Brandt’s warning of a 75% correction looms large, with historical patterns and inflation data working against BTC’s favour.
The much-hyped “Uptober” rally has failed to materialize, and Bitcoin is experiencing its longest consolidation period during a halving year.
The $283 billion China stimulus presents a glimmer of hope, but its impact remains uncertain. Investors should prepare for potential volatility as the market digests these macroeconomic developments in the coming days.
