Bitcoin Faces Profit-Taking Risks Amid Bullish Sentiment, Warn Analysts

As Bitcoin navigates through the first quarter of 2025, prominent analyst Willy Woo has sounded a note of caution for market participants. In a January 10 post on X, Woo highlighted that Bitcoin’s local risk model is at its highest point since January 2023, urging traders to adopt a cautious stance despite prevailing bullish sentiment.

Cautious Optimism in Bitcoin Markets

“Risk is peaking for the first time in this cycle,” Woo stated, emphasizing that significant profits in the market are yet to be realized, leading to more profit-taking before the market resets. The broader market mood, as measured by the Fear and Greed Index, supports Woo’s observations. The index currently stands at a “Greed” score of 69, reflecting elevated optimism compared to a “Neutral” score of 50 just days earlier.

Following its brief rally past the $100,000 psychological level on January 8, Bitcoin has retreated and is now trading at $94,120, marking a 3.92% dip over the past week, according to CoinMarketCap.

Mixed Opinions on Market Reversal

While Woo advises prudence, not all analysts are convinced the current pullback signifies prolonged bearishness. Pseudonymous trader Rekt Capital noted in a January 10 post that Bitcoin’s 15% correction from its all-time high of $108,000 on December 17 aligns with historical trends observed in previous market cycles.

“The timing of this retrace is in line with historical tendencies,” Rekt stated, expressing confidence in a potential market recovery. Similarly, Samson Mow, CEO of Jan3, dismissed the current dip as “manufactured” to suppress prices for institutional players. “If you understand the macro landscape, you understand that all dips are fake now,” Mow asserted to his 327,000 followers.

Macro Factors Add Complexity

Adding to the uncertainty, the U.S. Federal Reserve’s latest nonfarm payroll (NFP) data exceeded expectations, showcasing a robust labor market. This data, coupled with lower-than-expected unemployment rates, has exerted downward pressure on risk assets, including Bitcoin.

While Bitcoin remains a focal point for both retail and institutional investors, the divergence in analyst opinions highlights the complexity of navigating the current market. Traders are left balancing optimism fueled by historical patterns and skepticism rooted in macroeconomic factors.