Can Bitcoin Bounce Back To $35K? Here’s What Stands In The Way
June 03 2022 - 01:00PM
NEWSBTC
No action in the crypto market as Bitcoin still trades around the
$29,000 to $30,000 area. The first crypto by market cap has been
rangebound since the Terra ecosystem collapsed taking a hit on an
already soft market. Related Reading | Mr. Wonderful-Backed
Green Bitcoin Mining Venture To Build $500M HQ In N. Dakota The
“Black Swan” event has preceded one of the worst periods for the
space as Bitcoin and Ethereum recorded record consecutive losses.
At the time of writing, BTC’s price trades at $29,500 with a 2%
loss in the last 24-hours. According to a pseudonym trader, Bitcoin
could be ready to re-test the lows at $29,000 before resuming its
bullish momentum. The trader expects BTC’s price to potentially dip
below this level and then bounce back to $35,000. This would put
Bitcoin close to the bottom of its current range. Therefore, a move
to the upside and some relief seems logical, if BTC is to continue
to trend rangebound. In that sense, the pseudonym trader
recommended to “play the trend” and re-examining if BTC breaks
above those levels. The trader said via Twitter: Before you get
discouraged about trading just remember this tiny little range of
chop is what’s been so difficult for everyone to figure out. Once a
direction is established from here it’ll get easier. A report from
QCP Research agrees that $28,700 is a major area of support, in
case of further downside, as it stands as BTC’s current 61.8%
Fibonacci retracement level. These Fibonacci levels have been
“pivotal”, the report says, for Bitcoin across its history.
Particularly during 2020, when the start of the COVID-19 pandemic
sent BTC to test the 61.8% Fibonacci level at around $3,800. This
level was held during one of BTC’s worst drawdowns. QCP Research
said: For BTC and ETH, the current drawdown is now identical to the
2020 Covid drawdown. It is possible that we see a short-term bounce
from these oversold levels. Why Bad News Is Good For Bitcoin And
Risk Assets In addition, the report claims BTC, and other risk-on
assets seem inversely correlated to the media. Whenever “good news”
on inflation, unemployment, and other metrics in the U.S. break to
the public, these assets seem to trade to the downside. The
opposite happened from 2020 to 2021 as bad news on COVID-19
translated into an economic stimulus. Now, the U.S. Federal Reserve
(FED) is determined to stop inflation and has begun removing
liquidity from global markets while it launches its Quantitative
Tightening (QT) program. This will force the institution to unload
its balance sheet into global markets. As a result, Bitcoin and
stocks will continue to suffer in the coming months, QCP Research
believes. The report claimed: This draining of liquidity will only
be exacerbated by the upcoming QT balance sheet unwind as well,
beginning 1 June. We expect these factors to weigh on crypto
prices. The current narrative in mainstream media is running on the
back of inflation. If it changes to words like “recession” or
“economic recession”, the U.S. FED might be forced to slow down on
its tightening giving some relief for Bitcoin and stocks, the
report claims. Related Reading | Arthur Hayes Says Bitcoin And
Ethereum May Not Be Ready To Recover Drastically In other words, if
news shifts from bad to worse, Bitcoin could change its direction
to the upside. In the meantime, it seems likely to remain
rangebound or with short live rallies.
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