As crypto markets rebounded on Wednesday, Bitcoin (BTC) bounced back from a recent selloff caused by the escalating conflict in the Middle East and aimed for higher gains. While some market watchers see this as a sign of strength and potential upside, others warn that the rally could be short-lived.
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Bitcoin shows strength despite growing geopolitical fears
Bitcoin surged 8.3% on Wednesday, breaking above $72,000 for the first time in a month. The cryptocurrency has been trading between $63,000-$73,000 since the beginning of February, but it has not been able to break above $70,000 during this time.
It is worth noting that the escalation of the US-Israeli war with Iran has caused significant volatility in risk assets, including cryptocurrencies. This led to a sharp decline on Saturday, when BTC fell to $63,000.
However, the prominent price of the crypto quickly stabilized around the mid-range local area, followed by a partial recovery above the $68,000 area earlier in the week. Now, Bitcoin is up 15.87% from its recent lows, hitting a one-month high of $73,479 on Wednesday morning despite rising geopolitical tensions.
In a recent episode of the Bits + Bips podcast, Chris Perkins, managing partner and president of CoinFund, emphasized that signs of BTC’s strength and stability, along with signs of liquidity entering the market, are a “good setup” for potential upside.
It is worth noting that Bitcoin exchange-traded funds (ETFs) have seen a significant performance in the last two days, with inflows of $683.34 million since Monday, indicating increased demand for investment products.
Alex Kupsikiewicz, chief market officer at FxPro, told Bloomberg, “This is a victory for cryptocurrencies, given the impressive sell-off in the financial markets and gold experienced the day before,” adding that “some traders may be looking at crypto as a safe haven.”
It is too early to call a bottom for BTC
Despite the rebound, Kupsikiewicz also warned that the situation remains “too fragile” to declare a market bottom. He explained that “Bitcoin is vulnerable due to the increasing volatility of stock indices, which forces institutional investors to reduce their leverage.”
Meanwhile, market watcher Ted Pillows suggested that the BTC rally could be short-lived, comparing the current performance of the flagship crypto to the price action of early 2022, when the Russia-Ukraine war began.
As the analyst pointed out, bitcoin, which had already corrected from its record high in 2021, saw initial volatility when the conflict broke out, but the next month saw around 40% before dropping another 67%.
BTC targets a potential 45% correction toward the $40,000 area. Source: Ted Pillows on X
According to the market watcher, this time, BTC will start a similar performance, which could lead to a 20%-25% rally to the $78,000-$80,000 zone. However, this reconstruction may find a strong rejection in this key horizontal region.
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If history repeats itself, the next phase of the cryptocurrency trend could begin soon, Ted Pilous has warned, potentially sending the price 45% below the potential rally peak price.
Analyst Ali Martinez observed that Bitcoin has been consistently priced between 1.0 and 0.8 MVRV over the past decade. According to the chart, this puts BTC’s potential between $43,647-$54,559.
As of this writing, Bitcoin is trading at $73,255, up 10% on the week.
Featured image from Unsplash.com, Chart from TradingView.com
