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Bitcoin could see a 47% correction, but some say it's going to $6,000

  • Bitcoin rallied to a fresh record high of over $2,700 on Thursday.
  • One analyst said that the cryptocurrency is close to a key level of $2,800 which could signal a correction.
  • The analyst told CNBC that the correction could see bitcoin fall as far as $1,470, marking a 46.5 percent decline.

Bitcoin is close to hitting a price that could see a 47 percent correction, according to one analyst, following a huge rally for the cryptocurrency that has led it to record highs.

On Thursday, bitcoin hit an all-time high of $2791.70, according to CoinDesk data, marking a 180 percent rally year-to-date.

Meanwhile, the number of long positions – those betting on bitcoin to rise – has risen 18.2 percent, while short positions – those thinking the cryptocurrency will fall – have declined 10 percent since the start of the week, showing that traders are getting more bullish on the cryptocurrency, according to data from Bitfinex.

One technical analyst, who looks at historical trading patterns to determine future price moves, told CNBC that the $2,800 could mark a level of resistance where the bitcoin pulls back. Bitcoin was as little as $9 off of that price on Thursday morning.

Nicola Duke, an analyst at analysis platform Forex Analytix, uses a form of technical analysis known as Fibonacci retracement, which looks at the peaks and troughs of previous "waves" or rallies and falls in bitcoin to get a sense of where the future price of an asset could move.

A collection of bitcoin tokens stand in this arranged photograph.
Chris Ratcliffe | Bloomberg | Getty Images
A collection of bitcoin tokens stand in this arranged photograph.

In "wave two" of bitcoin which began in the fall of 2013 and bottomed in January 2015, the price of the cryptocurrency rallied sharply for several months before seeing a steady decline. Following January 2015, the asset began to rally again.

Currently, the bitcoin world is in "wave three" and according to Duke's analysis, $2,800 could be the level at which bitcoin begins its fall. The price is likely to hit $1,780, but could even fall as far as $1,470, Duke told CNBC. This would mark a 46.5 percent decline from Thursday's high.

According to Fibonacci analysis, the way bull markets typically work is that you'll have a pullback that stops when it retraces a key percentage of a previous move higher—these key percentages all come from so-called Fibonacci ratios. One of those ratios is 61.8 percent.

So she expects this particular wave, known as the fourth wave, to last 61.8 percent of how long wave two lasted, which means the rally after the correction would start in January.

"We will see the bottom in start of January, that is when stock markets typically tend to have a correction as well," Duke said.

But after that, there should be a sustained rally to $3,350 and then $4,480 in 2018, Duke said.

So while the long-term prospect of bitcoin seems to be positive, in the near-term, traders could see a pull-back. However, not all agree with Duke's forecast.

Bitcoin to hit $6,000?

A number of reasons have pushed bitcoin to record highs, such as legalization of the currency in Japan for payments, boosted interest from Korea, as well as the conclusion of a debate about the future of the cryptocurrency.

Fifty-six companies around the world and 83 percent of bitcoin miners supported the "Bitcoin Scaling Agreement," according to the Digital Currency Group. The document lays out an upgrade that should increase bitcoin's transaction capacity.

Because of these factors, Aurelien Menant, CEO of Gatecoin, a regulated crytocurrency exchange, said bitcoin could hit $6,000, revising a forecast from earlier in the year of $3,000.

"There is a lot of fresh liquidity flowing into bitcoin, thanks to a surge in interest among investors in Asia, notably Japan and Korea, coupled with a resolution to the scaling debate. I would not be surprised to see the bitcoin price doubling again to around $6000 by the end of the year," Menant said.