Andrew Kang, co-founder and partner of Mechanism Capital, stated that most market participants are not aware of the significance of Bitcoin potentially breaking out of the price range it has been in for the past four months.
Kang compared the current market situation to the range in May 2021, when Bitcoin and other cryptocurrencies also experienced a parabolic surge. The time when the cryptocurrency market leveraged over $500 billion (excluding CME) is close to the historical high, and the current situation is more complex. Kang explained that this time, the high consolidation range lasted longer (18 weeks compared to 13 weeks), and has not yet experienced extreme liquidation, in contrast to the mid-term retractions experienced during the 2020-2021 bull market.
Kang concluded, “It is very likely that my initial estimate of below $50,000 was too conservative, and we may see a more extreme pullback to the $40,000 range. Such a pullback would be quite detrimental to the market, and it may take several months of oscillation/downtrend (recovery period) before a reversal to an upward trend is possible.”