Altcoins experienced a comfortable bounce on May 13 as the initial panic sparked by the bitcoin selloff started to crash Terra’s UST and many stablecoins lost their dollar peg and risk-loving traders looked to collect assets trading at yearly lows.
Despite a major correction over the past week, Bitcoin (BTC) bulls managed to make their way back to the $30,000 region, a level that was defended multiple times during the 2021 bull run.
Here’s a look at what many analysts are saying about Bitcoin’s future going forward as the price attempts to recover in the face of several headwinds.
Is a short squeeze suspended?
Insight into the minds of derivatives traders has been provided by cryptocurrency analytics platform Coinalyzewhich evaluated Bitcoin long to short positions of perpetual BTC/USD contracts on ByBit.
As seen in the lower half of the chart above, interest in sell orders, represented in red, has surged during the recent market pullback indicating that derivatives traders expect further declines in the short term.
“Sentiment has been very negative over the past few days, as we have seen in ByBit’s buy/sell ratio and funding rate. A short squeeze/bounce is expected,” Coinalyze founder Gabriel Doudan told Coinalygraph in private comments.
A short-term breakout to $35,000 is expected
Bitcoin’s drop to $26,716 on May 12 was notable as it broke the May 2021 low of $28,600, “which was seen as the last man standing on BTC” according to David Lifchitz, managing partner and chief investment officer at ExoAlpha.
In Lifchitz’s view, the rebound seen on May 13 was to be expected as “a lot of bad news has been dumped” while “a panic action over the failure of ground tanks has already taken place”.
Bitcoin bottoms in May 2021 “looks like a good entry point here with a tight stop in case the purge continues” according to Lifchitz, but traders should not expect a return to $60,000 overnight, and instead should set a short term The more modest goal is $35,000.
“Buy $28.5K / Stop At $26.5K / Profit Target $34.5K = $6K Up / $2K = 1/3 win/loss ratio and from an investment point of view, looks convincing to me.”
Related: Buy a dip, or wait for maximum pain? Analysts Discuss Whether Bitcoin Price Has Bottomed
V-shaped rebound is unlikely
Market analyst and Twitter user pseudonym ‘Rekt Capital’ provided insight into what it will take for Bitcoin to regain its bullish momentum, which Spread The following chart indicates that BTC “needs to hold $28,600 as price support to challenge $32,000,” while “weekly close below green will be bearish.”
While many bullish traders are hoping for a quick recovery from this latest downturn, Rekt Capital cautioned that “by the standards of history, a sharp V-shaped recovery to mark the bottom of a generation is less likely.”
analyst She saidAnd
“Many are expecting BTC’s previous bear market bottom in March 2020 to be very volatile. But the overall price history suggests that extended ranges are the most likely.”
The total cryptocurrency market capitalization now stands at $1.287 trillion and the bitcoin dominance rate is 44.4%.
The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risks, you should do your own research when making a decision.