As the crypto markets rebounded on Wednesday, Bitcoin (BTC) bounced back from the recent selloff triggered by the escalating Middle East conflict, targeting a surge toward high levels. While some market observers see this as a sign of strength and potential bottoming, others warn that the rally could be short-lived.
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Bitcoin Shows Strength Despite Growing Geopolitical Fears
On Wednesday, Bitcoin surged 8.3% to trade above the $72,000 barrier for the first time in a month. The cryptocurrency has been trading between the $63,000-$73,000 price range since early February, but it has failed to break past the $70,000 mark throughout this period.
Notably, the escalation of the US-Israel war with Iran has introduced significant volatility to risk assets, including cryptocurrencies. This resulted in sharp declines on Saturday, with BTC dropping to $63,000.
However, the flagship crypto’s price quickly stabilized around the mid-zone of its local range, followed by a partial recovery above the $68,000 area at the start of the week. Now, Bitcoin has surged 15.87% from its recent lows, reaching a one-month high of $73,479 on Wednesday morning despite increasing geopolitical tensions.
In a recent Bits + Bips podcast episode, Chris Perkins, Managing Partner and President of CoinFund, highlighted that BTC’s signs of strength and resilience, alongside signs of liquidity entering the market, are a “good setup” for a potential bottoming.
It’s worth noting that US spot Bitcoin Exchange-Traded Funds (ETFs) have seen a remarkable performance over the past two days, with $683.34 million in inflows since Monday, suggesting increasing demand for the investment products.
Alex Kuptsikevich, chief market analyst at FxPro, told Bloomberg, “This is a victory for cryptocurrencies, given the impressive selloff those financial markets and gold experienced the day before,” adding that “perhaps some traders are looking at crypto as a safe haven.”
Too Early To Call BTC’s Bottom
Despite the rebound, Kuptsikevich also warned that the situation remains “too fragile” to declare the market bottom. He explained that “Bitcoin is vulnerable due to the increased volatility of stock indexes, which is forcing institutional investors to reduce their leverage.”
Meanwhile, market observer Ted Pillows suggested that BTC’s rally could be short-lived, drawing a comparison between the flagship crypto’s current performance and its early 2022 price action when the Russia-Ukraine war started.
As the analyst noted, Bitcoin, which had already begun correcting from its 2021 all-time high, saw initial volatility when the conflict erupted, but pumped almost 40% in the following month before dumping another 67%.
BTC targets a potential 45% correction toward the $40,000 area. Source: Ted Pillows on X
This time, BTC is beginning to display a similar performance, which could lead to a 20%-25% rally toward the $78,000-$80,000 zone, according to the market watcher. However, this rebound could be followed by a strong rejection at this key horizontal area.
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If history repeats, the next phase of the cryptocurrency’s downtrend could begin soon, Ted Pillows cautioned, potentially sending the price 45% below the rally’s potential peak prices.
Analyst Ali Martinez observed that Bitcoin has consistently bottomed between the 1.0 and 0.8 MVRV Pricing Bands over the past decade. According to the chart, this would place BTC’s potential bottom between the $43,647-$54,559 levels.
As of this writing, Bitcoin is trading at $73,255, a 10% increase in the weekly timeframe.
Featured Image from Unsplash.com, Chart from TradingView.com
