Bitcoin has proven stability, sitting at the $94,000 level this week after an impressive 27% recovery in April. But signs are increasingly pointing to a price pullback as new-market realities set in, changing the landscape. This improvement follows a recent relaxation of international trade tensions. Now the cryptocurrency faces a perfect storm of investor pessimism and bearish market signals.
Market Recovery and Trade Tensions
For instance, in early April, Bitcoin rallied alongside a respite from escalating global trade tensions. This relief was sorely needed in the wake of the tariff policies adopted by U.S. The 90-day pause provided a window for market stabilization, allowing Bitcoin to regain some lost ground. The previous episode of market turmoil in May caused Bitcoin to crash down to $74,500.
Bitcoin’s long-short ratio has flipped very bearish over the last week. This change means there are more new short positions being opened compared to new long positions. This points to an increasing skepticism amongst traders towards Bitcoin’s near-term potential.
Expert Opinions and Future Projections
Overdoing the caution, but talking up caution In spite of these cautionary signals, many industry experts are still bullish on Bitcoin’s long-term prospects. Arthur Hayes, the chief investment officer at Maelstrom, believes in Bitcoin’s ability to bounce back. So does he think it will survive any future market-wide panic that Trump causes? He further pointed to when Bitcoin crashed to $74,500 at the beginning of April — which has been its price low to date. In fact, Hayes has gone as far as to predict Bitcoin will reach $200,000 this year.
Bernstein analysts piled on six days later with a similar refrain, adding that it’s “difficult to be pessimistic” on Bitcoin. They predict the cryptocurrency will reach as high as $120,000 before the second quarter draws to a close.
Institutional Interest and Gold Rotation
2021 was a record-setting year as institutions would once again become some of the biggest buyers of Bitcoin. Inflows into spot Bitcoin exchange-traded funds (ETFs) exploded last week. This continued surge comes on the heels of a relatively lackluster first quarter and indicates increasing bullishness from institutional investors.
Geoff Kendrick, head of digital assets research at Standard Chartered. He pointed out a major change in investment strategy as investors are now leaving gold and flocking to Bitcoin. Gold skyrocketed to a record-setting $3,300 per ounce in April.
Bitcoin gains are catching up to gold, and I think Bitcoin is a better hedge than gold against strategic asset reallocation out of the US - Geoff Kendrick
Analysts at on-chain firm Glassnode have observed a downturn in spot demand. Third, they notice aggressive sellers regaining the upper hand, a sign that either profit taking or buyer exhaustion is occurring or a potential market reversal.
Aggressive sellers are dominating and spot demand is weakening ― potential signs of profit taking, buyer exhaustion, or a reversal - Glassnode analysts
