Bitcoin Analyst Warns “Risk is Peaking” in Current Crypto Cycle

Highlights:

• Willy Woo warns of unprecedented risk levels in the current crypto cycle.
• He advises caution as more profit-taking is likely in the near term.
• Analysts like Rekt Capital and Samson Mow foresee a potential market reversal despite caution.

In a Jan. 10 X post, Bitcoin trader and analyst Willy Woo warned that risk in the current crypto cycle is reaching unprecedented levels. He advised crypto market participants to tread carefully in the coming months, warning that more profit-taking is likely in the near term. He said Bitcoin sentiment looks bullish, but his BTC local risk model revealed that risk levels have reached heights unseen since January 2023.

Bitcoiners, sentiment seems uber bullish but I say take a cautious approach in the months ahead.

Risk is peaking for the first time in this cycle and there's a ton of profit in coins that have been selling and plenty more profit-taking to go before we are properly reset. pic.twitter.com/J2KisHPxnK

— Willy Woo (@woonomic) January 10, 2025

The Fear and Greed Index, which tracks market sentiment for Bitcoin and other cryptocurrencies, indicates a prevailing “Greed” appetite. The Index now stands at a “Greed” score of 69, up by 19 points from its “Neutral” score of 50 on January 10. Since Bitcoin’s retracement from the $100,000 psychological level on January 8, it has stayed below that threshold. BTC is currently around $94,222, reflecting a 4.01% decline over the past week.

Bitcoin continues to prove its volatility, responding strongly to macroeconomic factors. Earlier this week, reports revealed that the U.S. Department of Justice has been authorized to liquidate approximately $6 billion in BTC seized from the Silk Road marketplace.

The market dropped following this news. However, industry leaders such as Bitwise CIO Matt Hougan assured that the market would absorb and repurchase the BTC if the U.S. government decided to sell. Despite these reassurances, Bitcoin has not yet fully recovered. With the incoming Donald Trump administration expected to support the industry, volatility may rise further in the coming days.

Arthur Hayes Predicts Crypto Bull Cycle Will Face a Severe Correction After Q1

Woo’s prediction aligns with Arthur Hayes, co-founder of BitMEX, who forecasts that the cryptocurrency market will reach its peak in mid-March. He expects a significant correction to follow. Hayes believes pro-business and pro-crypto policies under Donald Trump, who takes office on January 20, will push Bitcoin and other crypto assets higher. He also emphasizes that US Dollar liquidity will continue to fuel optimism in the crypto market.

He expects that the market will see a correction if liquidity decreases and Trump-driven optimism fades. Also, Tax season in mid-April will reduce funds in the Treasury’s General Account, causing a liquidity shortage. Hayes believes this could lower investor confidence. He expects a correction similar to Bitcoin’s drop in mid-2024 after its early-year highs.

“Sasa” is an essay where I explain y I think #crypto tops out in mid-Mar and then severely corrects. Until then is time to dance. https://t.co/Apt124sOjp pic.twitter.com/LKQ24GMtpq

— Arthur Hayes (@CryptoHayes) January 6, 2025

Market Reversal Possible Amid Price Dips: Analysts

However, not all market observers share Woo’s cautious view. Other traders, like pseudonymous analyst Rekt Capital, believe a market reversal is possible. In an X post on Jan.10, said the current 15% drop aligns with patterns seen in past cycles.

#BTC

Bitcoin started its current -15% pullback in Week 7 of Price Discovery

The timing of this retrace is in line with historical tendencies

It is the first Price Discovery Correction of this cycle

As a result, it has a high-probability of reversal$BTC #Crypto #Bitcoin https://t.co/bpcrCHuIVf

— Rekt Capital (@rektcapital) January 10, 2025

Samson Mow, CEO of Jan3, echoes this optimistic outlook, suggesting that recent price dips might be intentionally managed to allow larger investors to enter at lower levels.