CNBC Quick Cash dealer Brian Kelly sees three potential indicators of a worth high as Bitcoin (BTC) hits $19,000. Each elementary and technical elements recommend a pullback might be imminent because the rally turns into overextended.

BTC/USDT 1-hour chart (Binance). Supply: TradingView.com

Kelly named three the reason why a short-term Bitcoin pullback may happen. The explanations have been the pump of altcoins, overpriced tackle development and excessive funding charges. On Nov. 25, he said on CNBC:

“I’m nonetheless a Bitcoin bull. In the long term, I’m going to be a bull for the following decade. However, if I take off the long-term investor hat and placed on my short-term hedge fund dealer hat, there are a few issues on the market that I’m beginning to see are indicators of a high.”

Altcoin pump is shaking issues up

As Cointelegraph reported, various cryptocurrencies, or altcoins, corresponding to XRP and Stellar (XLM) have surged steeply in current months. Their uptrends have been paying homage to the January 2018 altcoin mania, when BTC began to drag again and altcoins rallied.

Over the last market peak, Bitcoin corrected strongly as altcoins rallied, after which your complete market crashed in tandem within the months that adopted.

Contemplating that main altcoins have surged 50% to 100% in current weeks, Kelly is cautious in regards to the altcoin market’s upsurge. He stated:

“Greater than every other asset class on this planet, Bitcoin is topic to FOMO greater than the rest. We’re beginning to see speculative cash, cash which are beneath $5, begin to go up 30% to 40% a day. These are the forms of issues that occur at quick to medium-term tops.”

The rally in altcoins has been inflicting main issues within the cryptocurrency market. For example, on Nov. 24, the value of XRP rallied almost 50%, spiking above $0.90 on Coinbase. The demand elevated to a degree the place it prompted Coinbase to quickly go down, which coincided with a drop in Bitcoin and Ether (ETH) costs.

Overvalued Bitcoin tackle development

Kelly has constantly used the tackle development metric of Bitcoin as a technique to worth BTC since 2017. When the tackle development doesn’t match the value of BTC, it may signify that BTC is overpriced.

Presently, Kelly stated that the market is pricing in a 25% tackle development for Bitcoin within the subsequent month. Based on Kelly, it is a regarding signal that would imply that the market is overvaluing BTC within the close to time period. He stated:

“Once I take a look at the tackle development, the market is pricing in about 25% tackle development over the following 30 days. Everytime you get that massive of an tackle development implied, that could be a warning signal.

Futures funding charges are excessive

Lastly, Kelly pinpointed the rising funding charges of Bitcoin perpetual futures contracts throughout main exchanges.

When the funding price will increase, it implies that the market is dominated by consumers and long-contract holders, growing the likelihood of an extended squeeze or a pullback. He famous:

“The final one is that we’re beginning to see retail come into this market and also you’re beginning to see the rates of interest that it costs on margin going a lot greater.”

Counterarguments in opposition to an area high at $19,000

Up to now two days, nonetheless, the BTC futures funding price stabilized after Bitcoin’s worth dipped from $19,400 to $18,700. 

However whereas the funding price remains to be greater than regular, it’s hovering at round 0.03%. For comparability, the funding price hovered at 0.18% on main exchanges on the peak of the current rally.

The market is getting much less overheated whereas many addresses are comfortably in revenue. The mixture of the 2 may permit the rally to proceed within the close to time period.

Google Tendencies knowledge additionally exhibits that the continued rally has decrease general mainstream curiosity than three years in the past, which means that the rally is simply in its early levels. The recognition of the key phrase “Bitcoin” on Google Search is simply 20% of the curiosity seen in late 2017.