As Bitcoin tops $100k analysts prepare for volatility and correction fears

Bitcoin has finally crossed the $100,000 mark, and while that’s big news for the industry, some analysts are sounding the alarm about what comes next.

Bitcoin btc1.77%Bitcoin has long been touted by its die-hard supporters as the crypto destined to hit $100,000 — and eventually even $1 million. Now, with Bitcoin finally surpassing the $100,000 mark, the question remains: Is this the beginning of something bigger, or are we nearing a point where the market could hit a rough patch?

Accumulation zones and liquidity gaps

Data revealed by blockchain analytics firm Glassnode highlights key levels shaping Bitcoin’s current market dynamics, based on their new Cost Basis Distribution metric, which helps track where BTC has been bought and sold by showing where investors have concentrated their purchases.

According to their findings, the $39,000-$40,000 range has become “the largest accumulation zone” in 2023, with 322,000 BTC bought at these levels. This shows that investors have had confidence at that level, and it might act as a key support should Bitcoin’s price drop.

Over the past three months, the $62,000–$64,000 range has become a key area where investors have built up their positions. The period helped set the stage for Bitcoin’s rise past $100,000, and now, these levels are seen as “strong demand zones,” likely to draw in buyers if Bitcoin’s price falls back to them, the analysts say.

“This period marked consolidation and investor positioning for the rally. These levels now serve as strong demand zones that were critical in kickstarting the next leg of the bull run.”

Glassnode

More recently, over 101,000 BTC have been accumulated between $96,000 and $98,000, making this range a strong support zone in the short term. Above $98,000, about 81,000 BTC were bought, creating resistance, the analysts add. However, Glassnode points out that below $96,000, there’s weak support because not much trading has happened there, opening space for more volatility if prices drop toward the liquidity gap below $88,000.

Voices of caution

While optimism currently surrounds Bitcoin’s rally, some crypto figures urge caution. As crypto.news reported earlier, Chris Burniske, a partner at Placeholder and former ARK Invest analyst, advises against overhyping targets in the current cycle.

Looking at past bull markets, Burniske pointed out how extremely high expectations during Bitcoin’s 2021 run eventually led to disappointment, as the price failed to reach the expected $100,000 peak.

“People won’t like me saying this, but if $10T is the round # target, then we likely fall short of it this cycle,” he wrote in a Dec. 6 post on X, adding that “It was a good rallying cry from a capitulation bottom, and will prove directionally correct this cycle, only to be exceeded with time.”

Burniske also highlighted the need to balance financial goals with personal priorities, urging investors to enjoy their gains instead of constantly chasing the perfect market move. His caution comes as Bitcoin pulls back from its recent high of $103,000, sitting at around $98,000 as of press time.

Broader market risks

Warnings aren’t limited to crypto experts only. For instance, Bank of America strategist Michael Hartnett also flagged potential overheating in financial markets, pointing to the S&P 500’s remarkable 27% gain this year, what appears to be its best performance since 2019. With the index nearing its dot-com-era peak valuation, Hartnett predicts an “overshoot” for Bitcoin and stocks in early 2025.

Bitcoin, now with a market capitalization of around $2 trillion, ranks as the world’s 11th-largest economy. And while institutional interest has bolstered its rise, concerns about market leverage still loom. Earlier on, Galaxy Digital‘s Mike Novogratz shared similar concerns, warning that the current high leverage in the crypto market will eventually lead to “one, if not two, vicious retracements, which will test your soul.”

Navigating the path ahead

What is clear now is that the $96,000–$98,000 range acts as the first line of defence, with the $62,000–$64,000 accumulation zone coming next. However, if Bitcoin drops below $88,000, the liquidity might — in theory — cause a faster decline, possibly pushing the price back to the $39,000–$40,000 range, which is seen as a historical demand zone.

The market’s future is anyone’s guess, but it’s clear that factors like economic trends, investor sentiment, and the political landscape will play a big role, especially under the Trump administration.