Are We Set To See $55k On Bitcoin Soon? Here Are 3 of the Biggest Signs
Key Insights
- Michael Novogratz predicts a Bitcoin correction to the mid-$50,000s before reaching a new all-time high.
- Bitcoin spot trading volume has also hit a 16-month high, indicating strong market activity and a potential pre-halving peak.
- Demand for Bitcoin is also overwhelming exchanges like Coinbase, highlighting high investor interest.
- The Bitcoin derivatives market too is booming, with options and futures trading exceeding spot trading volume.
- Investors should be cautious due to the potential for harsh liquidations as the market wakes up.
Bitcoin's performance over the last week has been nothing short of stellar over the last week (and even since the start of 2023, really).
However, here's another warning of a potential BTC correction before the much-awaited all-time high.
Novogratz: Bitcoin May Drop to Mid-$50,000s
In a recent interview with Bloomberg, Michael Novogratz, CEO of Galaxy Digital and one of the leading voices in the cryptocurrency field, discussed his opinions on the prospects of BTC.
Considering how the crypto market is in a "price discovery" phase, brought on by the introduction of spot Bitcoin ETFs in the US and Canada, Novogratz stated that he expects some corrections and consolidation in the market very soon.
According to Novogratz, it wouldn't surprise him if BTC fell to the mid-$50,000s before starting to rise again to a new ATH.
Moreover, the Galaxy Digital CEO says that remains optimistic about BTC in the long run because he sees it as a valid store of wealth.
In essence, Novogratz expects the flagship cryptocurrency to decline from here and hit the $55,000 zone or even lower.
Bitcoin Spot Trading Volume Hits 16-Month High
Despite Novogratz's warnings about a possible BTC crash, market data indicates that interest and activity in the crypto market are at all-time highs.
Kaiko reports that on 28 February, the spot trading volume of BTC on CEXs broke its previous record set in December 2022 when FTX crashed, with a 16-month high of $35 billion.
The snapshot above shows that Binance led the charge, with over $20 billion in BTC spot trading on 28 February, followed by Bybit, Coinbase, OKX, and Kraken, which all saw billions of dollars in Bitcoin trades.
This demand for crypto was so massive, that Coinbase experienced technical difficulties with handling demand on 28 February.
Coinbase CEO Brian Armstrong also commented on the issue, stating that the exchange prepared for 10 times its usual traffic, but the demand still managed to wreck things.
This massive influx of demand is showing signs of a pre-halving peak, indicating that investors should be cautious with their trades from here on out.
The Bitcoin Derivatives Market Also Booms
There has been a significant surge in trading activity and open interest in both the spot and futures markets for Bitcoin.
Laevitas, for example, reports that the trading volume of Bitcoin derivatives (options, perpetual contracts, and futures) hit $87 billion in the last 24 hours, making up 94% of the $387 billion overall volume of crypto derivatives.
Moreover, the total notional open interest of Bitcoin options hit an all-time high of $26 billion on Deribit, suggesting that traders are now leveraging several instruments to trade crypto, and not just actual Bitcoin.
Overall, while the market data shows that the interest and activity in the crypto space are at record levels, investors should be aware that times like these often give rise to the harshest liquidations.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.