A surprising price recovery in the cryptocurrency market led by Bitcoin caught bears on the wrong side of the trade this Monday. Bears lost $1 billion on their leveraged short bets, according to data provided by ByBt.com.
The BTC/USD exchange rate rebounded to an intraday high of $38,750 before correcting lower short-term profit-taking sentiment. At its previous week’s lowest, the pair was changing hands for $31,111 — a 24.55 percent retracement between extreme swing highs and lows in the previous 24 hours.
The new buying sentiment appeared right ahead of the CoinDesk Consensus conference, featuring critical keynote addresses from Bridgewater Associate’s founder Ray Dalio, alongside MicroStrategy’s chief executive Michael Saylor, Ark Invest’s CEO and CIO Cathie Wood, and Federal Reserve’s Board of Governors’ member Lael Brainard.
Last week, traded had panic-dumped their upside crypto positions after taking cues from Elon Musk. Musk, the founder of electric vehicle giant Tesla, responded “indeed” to a Twitterati on Tesla’s potential intention to unload its $1.5bn worth of bitcoin investments. Before that, Musk was engaging in a tweet war with some of the most influential crypto influencers, including Saylor.
Bitcoin prices crashed to as low as $30,000 on May 19, liquidating over $9 billion worth of long positions, the worst since the coronavirus-led price crash in March 2020. Today, the keynotes from industry professionals were expected to offset the Musk-led FUD.
So it happened, the Bitcoin price reacted positively to Dalio’s admission that he holds some bitcoin tokens. The billionaire, hedge fund manager, did not reveal the exact quantity. Still, it was enough to add a free dose of optimism in the market that was risking additional declines below $30,000 just 24 hours ago.
“30K held, we’re seeing a short squeeze rn,” noted a pseudonymous market analyst. “You’ll see how fast people will forget the crash and become euphoric again.”
The independent chartist added that the bitcoin price could climb until $42,000 on fresh euphoria. However, bulls need to hold $42K as support or risk crashing back into bearish trading ranges.
30K held, we’re seeing a short squeeze rn.
You’ll see how fast people will forget the crash and become euphoric again.
— Byzantine General (@ByzGeneral) May 24, 2021
Bullish Bitcoin Market Ahead?
On-chain analyst Willy Woo also noted that the current bitcoin price rebound looks like March 2020 retracement.
Back then, a strong fiscal response from global central banks to cushion the impact of coronavirus on economies reduced the appeal of holding US dollar and government bonds. Investors then turned to riskier safe-haven assets, including stocks and gold. Bitcoin too benefited from the capital migration, rising by more than 1,700 percent from its last year’s nadir of 3,858.
“No-coiners are taking this opportunity to buy the dip,” said Woo. “In case you’re wondering, the bull market is very much intact.”
Meanwhile, Barry Silbert, the founder and CEO of Digital Currency Group advised traders and investors to watch for stock market trends before determining their bias in the crypto markets. Bitcoin and the S&P 500 showed an erratic positive correlation with one another all across the pandemic-led rally.
“Where the crypto market goes from here is completely dependent on the stock market over the next couple weeks. The ultimate source of value is so ambiguous that it has a lot to do with our narratives rather than reality.”