Altcoins saw a relief bounce on May 13 as the initial panic sparked by the Bitcoin selloff, Terra’s UST collapse and several stablecoins losing their dollar peg begin to wane and risk-loving traders seek to recover assets trading at yearly lows.
Despite the significant correction that has occurred over the past week, Bitcoin (BTC) bulls have managed to return to the $30,000 area, a level that has been repeatedly defended during the 2021 bull market. .
Here’s a look at what several analysts have to say about Bitcoin’s future outlook as the price tries to rally against multiple headwinds.
Is a short squeeze pending?
A glimpse into the minds of derivatives traders was provided by the cryptocurrency analytics platform Coinalyserwhich assessed Bitcoin long to short positions for BTC/USD perpetual contracts on ByBit.
As seen in the bottom half of the chart above, interest in shorts, which is depicted in red, has increased during the recent market pullback, indicating that derivatives traders were expecting more downside shorts. term.
“Sentiment was very negative over the past few days, as evidenced by ByBit’s long/short ratio and funding rate. A short squeeze/bounce is expected,” Coinalyze founder Gabriel Dodan told TSWT in a post. private comments.
A short-term breakout at $35,000 is expected
Bitcoin’s drop to $26,716 on May 12 was notable in that it fell below the May 2021 low of $28,600, “which was considered the last man standing for BTC” according to partner David Lifchitz. director and chief investment officer at ExoAlpha.
In Lifchitz’s opinion, the rebound seen on May 13 was to be expected because “a lot of bad news had been flushed out” while “the panic of the UST fiasco has already happened”.
Bitcoin sitting at the May 2021 low “looks like a good entry point here with a tight stop if the purge continues” according to Lifchitz, but traders shouldn’t expect a return to 60,000 $ is happening overnight and should instead set a more modest short-term target of $35,000.
“Long at $28.5,000 / Stop at $26.5,000 / Target profit at $34.5,000 = up $6,000 / down $2,000 = win/loss ratio of 3/1 and point From an investment perspective, that seems compelling to me.”
Related: Buy the dip or wait for the maximum pain? Analysts wonder if the price of Bitcoin has bottomed out
A V-shaped recovery is unlikely
An overview of what it would take for Bitcoin to regain its bullish momentum was provided by market analyst and pseudonymous Twitter user “Rekt Capital”, who post the following chart noting that BTC “must hold $28,600 as price support to challenge $32,000,” while a “weekly close below green would be bearish.”
While many bullish traders are hoping for a quick recovery from this latest downturn, Rekt Capital warned that “by historical standards, a strong V-shaped recovery to mark a generational low is less likely.”
The analyst mentioned,
“Many are expecting one, as the previous March 2020 BTC bear market low was very volatile. But macro price history suggests extended ranges are more likely.
The overall cryptocurrency market capitalization now stands at $1.287 trillion, and Bitcoin’s dominance rate is 44.4%.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of TSWT.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.