The crypto market is still quiet as Bitcoin continues to trade in the $29,000 to $35,000 range. After the Terra ecosystem collapsed, Bitcoin has been trading rangebound and taking a huge hit to an already soft market.
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The “Black Swan” event has preceded one of the worst periods for the space as Bitcoin and Ethereum recorded record consecutive losses. At the time of writing, BTC’s price trades at $29,500 with a 2% loss in the last 24-hours.
A trader who is not identified as Bitcoin, believes that Bitcoin may be ready to test the $29,000 lows again before it regains its bullish momentum. The trader expects BTC’s price to potentially dip below this level and then bounce back to $35,000.
Bitcoin could be close to its bottom range. If Bitcoin is to remain rangebound, it would be sensible to move towards the upside or to some relief.
In that sense, the pseudonym trader recommended to “play the trend” and re-examining if BTC breaks above those levels. Trader saidTweet:
Before you get discouraged about trading just remember this tiny little range of chop is what’s been so difficult for everyone to figure out. Once a direction is established from here it’ll get easier.
A report from QCP Research agrees that $28,700 is a major area of support, in case of further downside, as it stands as BTC’s current 61.8% Fibonacci retracement level. These Fibonacci levels have been “pivotal”, the report says, for Bitcoin across its history.
BTC was particularly motivated to check the Fibonacci level, which is 61.8%, at approximately $3,800 in 2020. This level was held during one of BTC’s worst drawdowns. QCP Research reported:
BTC/ETH drawdowns are now the same as the 2020 Covid drawdown. There is a possibility that these levels are surpassed and we may see a temporary bounce.
Bitcoin and Risk Assets: Why bad news is good for them
BTC, as well as other risk-on assets, are inversely associated with media. Whenever “good news” on inflation, unemployment, and other metrics in the U.S. break to the public, these assets seem to trade to the downside.
Between 2020 and 2021, it was the reverse. The bad news regarding COVID-19 turned into an economic stimulant. The U.S. Federal Reserve is now determined to end inflation. It has started removing liquidity global markets, while its Quantitative tightening program (QT), is being implemented.
This will make it necessary for the institution to transfer its global balance sheet. QCP Research predicts that stocks and Bitcoin will continue to be affected in the future. This was the claim of QCP Research.
The upcoming QT balance sheets unwind, which will begin 1 June, will further exacerbate this liquidity drain. These factors will have a significant impact on the crypto price.
Mainstream media has a narrative that is based on inflation. If it changes to words like “recession” or “economic recession”, the U.S. FED might be forced to slow down on its tightening giving some relief for Bitcoin and stocks, the report claims.
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Bitcoin’s direction could shift to the upside if there is bad news. Bitcoin is expected to trade rangebound in the interim, with occasional rallies.