Altcoins saw a relief rally on May 13 as the initial panic sparked by Bitcoin’s sell-off of Terra’s UST crash and the loss of multiple stablecoins pegged to the U.S. dollar began to dwindle, with risk-loving traders looking to trade the asset at yearly lows.
Despite a major correction over the past week, Bitcoin (bitcoin) bulls have managed to get back into the $30,000 region, a level that has been defended several times during the 2021 bull run.
Here’s what several analysts have to say about Bitcoin’s outlook as it tries to recover amid multiple headwinds.
Is there a short squeeze?
Crypto analytics platform provides insight into the minds of derivatives traders co-analysiswhich evaluates Bitcoin long and short positions on the BTC/USD perpetual contract on ByBit.
As shown in the bottom half of the chart above, short interest, represented in red, has surged during the recent market downturn, indicating that derivatives traders expect more downside in the near term.
“Sentiment over the past few days has been very negative as seen by the ByBit long/short ratio and funding rate. Expect a short squeeze/bounce,” Coinalyze founder Gabriel Dodan told Cointelegraph in private comments.
Expect a short-term break to $35,000
Bitcoin’s drop to $26,716 on May 12 is notable as it fell below its May 2021 low, according to David Lifchitz, managing partner and chief investment officer at ExoAlpha $28,600, “This is seen as the last person to support BTC.”
In Lifchitz’s view, the May 13 rally was to be expected, as “a lot of the bad news has been cleared” and “the UST fiasco has taken place.”
According to Lifchitz, Bitcoin at the May 2021 low “seems like a good entry point, and if the wash continues, there is a tight stop here,” but traders shouldn’t expect a return to 60,000 overnight USD, but should set a more modest short-term target of $35,000.
“Long $28.5K / Stop Loss $26.5K / Profit Target $34.5K = Upside $6K / Downside $2000 = 3/1 Win/Loss Ratio, which is attractive to me from an investment perspective force.”
V-shaped recovery unlikely
Market analyst and pseudonymous Twitter user “Rekt Capital” provides the insight Bitcoin needs to regain its bullish momentum post The chart below states that BTC “needs to hold $28,600 as price challenge support at $32,000,” while “a weekly close below green would be bearish.”
While many optimistic traders are hoping for a quick recovery from the recent downturn, Rekt Capital warned that “by historical standards, a sharp V-shaped recovery to mark a generational bottom is less likely.”
“Many expected the March 2020 BTC bear market bottom to be very volatile. But macro price history suggests that a wider range is more likely.”
The overall cryptocurrency market cap is currently $1.287 trillion, with Bitcoin dominance at 44.4%.
The views and opinions expressed here are those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk and you should do your own research when making a decision.