Altcoins saw a bounce of relief on May 13 as the initial panic sparked by bitcoin selling The collapse of the Terra UST and the loss of dollar pegs from several stablecoins are beginning to subside, with risk-on traders looking to absorb assets trading at yearly lows.
Despite the important correction that took place last week, Bitcoin (BTC) bulls have managed to return to the $30,000 zone, a level defended multiple times during the 2021 bull market.
Here’s what various analysts are saying about Bitcoin’s prospects going forward as the price attempts to rally in the face of multiple headwinds.
Short Position Tapering Coming?
The analysis platform for cryptocurrencies Coinalyzewhich evaluated bitcoin long and short positions for BTC/USD perpetual contracts on ByBit provided a glimpse into the thoughts of derivatives traders.
As shown in the lower half of the graph above, interest in short positions, shown in red, has spiked during the recent market decline, suggesting that derivatives traders had been anticipating shorter-term declines.
“Sentiment has been very negative over the past few days, as evidenced by ByBit’s long/short ratio and funding rate. Expect a short/bounce squeeze.” Coinalyze founder Gabriel Dodan told Cointelegraph in private comments.
A short-term breakout to $35,000 is expected
Bitcoin’s plunge to $26,716 on May 12 was notable because it fell below the May 2021 low of $28,600 “which was viewed as the last man standing for BTC.” said David Lifchitz, Managing Partner and Chief Investment Officer of ExoAlpha.
According to Lifchitz, the recovery from May 13 has been to be expected since then“A lot of bad news has been suppressed” as the “UST fiasco panic is over”.
According to Lifchitz, Bitcoin at May 2021 lows “looks like a good entry point here with a tight stop if the purge continues” However, traders should not expect an overnight return to $60,000 to occur and should instead set a more modest short-term target of $35,000.
“Long at $28,500 / Stop at $26,500 / Target at $34,500 = $6,000 up / $2,000 down = P/L ratio of 3/1 and from an investment perspective I find it compelling.”
A V-shaped recovery is unlikely
The insight into what Bitcoin would need to regain its bullish momentum was provided by a market analyst and pseudonymous Twitter userr ‘rect capital’, the released The chart below notes that BTC “needs to hold $28,600 as support for the price to challenge $32,000.” while a “weekly close below the green zone would be bearish.”
While many bullish traders are anticipating a quick recovery from this recent drop, Rekt Capital cautioned against it “By historical standards, a strong V-shaped recovery that marks a generational nadir is less likely.”
the analyst called:
“Many are expecting one as the March 2020 BTC bear market bottom was very volatile. But macro price history suggests extended ranges are more likely.”
The cryptocurrency’s total market cap is currently $1.287 trillion and Bitcoin’s dominance rate is 44.4%.
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