An analyst who became popular after accurately calling the 2022 crypto meltdown is warning that Bitcoin’s (BTC) explosive move this week may be a bull trap.
Pseudonymous analyst Capo tells his 970,500 followers on the social media platform X that Bitcoin may suddenly correct after printing a new all-time high (ATH) of about $118,700 on Thursday.
A bull trap is a false signal that indicates that the bearish trend is over, but then the price abruptly reverses course and witnesses a deeper drawdown.
“This could very well be the ultimate bull trap. Staying cautious.”
Capo says that the broader crypto market looks primed to potentially form a bull trap as well, as alts have yet to print bullish higher high price patterns. He also expects another black swan event, a rare and unanticipated event that catalyzes a massive market meltdown.
“May was the local top for the market, with altcoins down 30%-50% from there. We’ve already seen a form of Black Swan with the Middle East conflict escalation, but I’m expecting another one. So far, this is still a lower high for alts, even if Bitcoin is making new ATHs due to buying pressure from institutional strategic reserves. In any case, invalidation levels are clear, and they haven’t been hit. Most altcoins remain in a clear downtrend, and some have even made new ATLs (all-time lows). The only crypto asset that has truly had a bull market is BTC, with a few other exceptions.”
Capo also tells his 128,307 subscribers on the instant messaging platform Telegram that the TOTAL2 chart, which tracks the market cap of all crypto assets excluding Bitcoin and stablecoins, is not yet invalidating a bearish head-and-shoulders pattern (H&S) on the three-day timeframe.
A head-and-shoulders pattern typically suggests that an asset is losing momentum and could reverse its uptrend if the price breaks below the structure’s support.
“Despite BTC reaching a new ATH, altcoins remain at a clear resistance. Something feels very off. I don’t trust this move.”
At time of writing, TOTAL2 is trading for $1.31 trillion.
Lastly, Capo says Bitcoin may be forming a blow-off top, a chart pattern in technical analysis showing a sudden rise in price that is followed by a sharp decline.
Looking at his chart, Capo suggests Bitcoin may correct to the $64,000 range.
Bitcoin is trading for $117,317 at time of writing, up 5.4% in the last 24 hours.