Expert Analyst Suggests Caution as Bitcoin Approaches $40,000

A prominent crypto analyst has recently cautioned investors about the risks of purchasing Bitcoin (BTC) at elevated price points. He indicates that while Bitcoin might soar even beyond $80,000, this surge could merely be a distribution phase within a longer bear market. His analysis points toward a possible correction that could see Bitcoin’s value drop to around $40,000, marking a significant market low.

The analyst, known as @Sherlockwhales on X, highlights the importance of remaining vigilant against the fear of missing out (FOMO). He specifically references the price range of $83,000 to $88,000 as a critical resistance zone that is likely to attract selling pressure. He believes BTC’s ascent through this range may not be as straightforward as some traders anticipate.

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His perspective is grounded in a Fibonacci retracement analysis derived from Bitcoin’s previous price trajectory between $97,000 and $60,000. This historical data reflects a full downward impulse followed by a recovery phase, wherein the price has made attempts to rebound yet continues to face significant pullbacks.

Within this analysis, @Sherlockwhales identifies key resistance points on Bitcoin’s chart at approximately $83,435 (0.618 Fibonacci), $84,647 (0.65 Fibonacci), and $89,797 (0.786 Fibonacci). He notes that these levels represent an area of untested resistance, where sellers may be more inclined to act, especially as traders who entered at these levels seek to break even.

Furthermore, he points out that the average buying price for holders of the US Spot Bitcoin ETF is around $87,830. Many investors, having acquired their positions over the past two years, are currently facing considerable unrealized losses with Bitcoin trading below their buy-in price. This situation has transformed the $87,000 to $88,000 threshold into a vital psychological level within the market.

If Bitcoin approaches this upper threshold again, the analyst believes that it could prompt many ETF investors to sell, given that they would finally have the chance to recoup their losses. He reinforces the idea that individuals who have endured significant declines since Bitcoin’s all-time high in October 2025 may choose to liquidate their holdings, increasing selling activity.

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@Sherlockwhales also observes that short-term holders have a cost basis around $80,100. He explains that Bitcoin’s price has historically formed local tops upon exceeding this level, as short-term investors generally capitalize on the opportunity to take profits. This pattern has occurred on two previous occasions, each time resulting in a notable price drop. The analyst warns that another rally toward $80,000 could similarly ignite a wave of selling pressure, which might lead to yet another downward correction.

In light of these observations, @Sherlockwhales strongly advises against purchasing Bitcoin around the $85,000 mark, labeling it a potential bull trap. He predicts that BTC could retreat to approximately $40,000, which he considers a likely point of final stabilization before the market embarks on a new upward trend.

Instead of making purchases at the current highs, he recommends that traders bide their time and consider entering the market later in October. According to him, this timeframe may present the most advantageous long-term investment opportunities for those looking to buy Bitcoin.