Can Bitcoin Bounce Back To $35K? Here’s What Stands In The Way

Reynaldo Marquez

1 year ago

3 mins read

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No action in the crypto market as Bitcoin still trades around the $29,000 to $30,000 area. The first crypto by market cap has been rangebound since the Terra ecosystem collapsed taking a hit on an already soft market.

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.

Bitcoin BTC BTCUSD — BTC moving sideways on the 4-hour chart. Source: BTCUSD Tradingview

According to a pseudonym trader, Bitcoin could be ready to re-test the lows at $29,000 before resuming its bullish momentum. The trader expects BTC’s price to potentially dip below this level and then bounce back to $35,000.

This would put Bitcoin close to the bottom of its current range. Therefore, a move to the upside and some relief seems logical, if BTC is to continue to trend rangebound.

In that sense, the pseudonym trader recommended to “play the trend” and re-examining if BTC breaks above those levels. The trader said via Twitter:

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.

Particularly during 2020, when the start of the COVID-19 pandemic sent BTC to test the 61.8% Fibonacci level at around $3,800. This level was held during one of BTC’s worst drawdowns. QCP Research said:

For BTC and ETH, the current drawdown is now identical to the 2020 Covid drawdown. It is possible that we see a short-term bounce from these oversold levels.

Why Bad News Is Good For Bitcoin And Risk Assets

In addition, the report claims BTC, and other risk-on assets seem inversely correlated to the 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.

The opposite happened from 2020 to 2021 as bad news on COVID-19 translated into an economic stimulus. Now, the U.S. Federal Reserve (FED) is determined to stop inflation and has begun removing liquidity from global markets while it launches its Quantitative Tightening (QT) program.

This will force the institution to unload its balance sheet into global markets. As a result, Bitcoin and stocks will continue to suffer in the coming months, QCP Research believes. The report claimed:

This draining of liquidity will only be exacerbated by the upcoming QT balance sheet unwind as well, beginning 1 June. We expect these factors to weigh on crypto prices.

The current narrative in mainstream media is running on the back of 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.

In other words, if news shifts from bad to worse, Bitcoin could change its direction to the upside. In the meantime, it seems likely to remain rangebound or with short live rallies.

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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