The Bitcoin price surged above $50,000 and mounted a sustained rally to $53,000 before retracing back downward, something that has taken the market by surprise. However, with expectations waxing stronger for the cryptocurrency, it could signal time for a possible correction and crypto analyst and market expert Michaël van de Poppe believes this correction could be as deep as 40%.
Sentiment Can Tell The Wrong Story For Bitcoin
In a post made on X (formerly Twitter), the crypto analyst outlined a number of things that could affect the Bitcoin price, be it positively or negatively, and one of those is market sentiment. Michaël van de Poppe explained that market sentiment “is always a wrong indicator” and is something that investors should apply in their strategy.
To drive this point further, the crypto analyst gave a couple of examples where sentiment has proven to be wrong. The first is the Spot Bitcoin ETF approvals, which saw calls for a new Bitcoin all-time high. However, while the BTC price would rally, it did not reach a new all-time high. “the strength of the markets was already reflected in the actual price action, but sentiment always overshoots as emotions are reflected into scenarios, hence why emotions have a bad impact on trading/investing,” the analyst explained.
Michaël van de Poppe also pointed out another scenario where sentiment was wrong and that was when the price fell from $49,000 to $39,000. This was a result of the outflows from the Grayscale Bitcoin Trust (GBTC), which the market expected would continue. However, the outflows would eventually slow down, giving room for the BTC price to rally.
Last but not least is the current market trend which the analyst points out is seeing a lot of interest. As expected, the sentiment among investors is that this interest would continue, but the crypto expert explains that in situations like these, “Emotions always exceed reality and sentiment overshoots the price action by a mile, that’s why people start to lose money.”
BTC Price To See A 40% Correction?
Following the massive rally that the Bitcoin price has seen over the last few weeks, the crypto analyst advises investors to have a game plan while approaching the market, either for trading or investing purposes. He points out that there is the possibility of a market correction once there is a turn in macro-economic events. One of these is the CPI, which came in higher last week, as well as a decrease in inflows as investors begin to pull back from the market.
Michaël van de Poppe clarifies that inflows are not just from Spot Bitcoin ETFs alone, as there are other avenues for inflows where investors could also begin selling their coins. “Those corrections, with the current sentiment, are going to be swift,” the analyst warns. “I don’t know exactly from where these will happen, but given the data it’s reasonable to suspect that the markets are peaking between $53-58K and are getting a 20-40% correction from there.”
BTC price continues bullish trend | Source: BTCUSD on Tradingview.com
