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BlockNews
Home BREAKING NEWS

Bitcoin Rebounded but Correction May Follow: Here is Why

Matoy by Matoy
May 20, 2024
in BREAKING NEWS, CRYPTO, INVESTING
Reading Time: 2 mins read
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  • Bitcoin’s price has surged over 19% to around $67,270, fueled by easing inflation expectations and increased ETF inflows.
  • Technical patterns suggest a potential pullback with the price possibly dropping below $54,000 if current support levels fail.
  • Tether’s recent minting of $1 billion may stabilize or further boost Bitcoin’s market in the short term.

Bitcoin has experienced a notable rebound, surging more than 19% from a two-month low to approximately $67,270 as of May 20. According to TradingView’s chart, the uptick in Bitcoin’s market value may be largely attributed to the cooling inflation rates and a consequent shift in bond traders’ expectations, now anticipating an interest rate cut as early as September.

Market Dynamics and Technical Analysis

The resurgence in Bitcoin’s value coincides with a revitalization in the inflows to spot Bitcoin exchange-traded funds (ETFs), which have provided additional momentum to the cryptocurrency’s price. However, despite the positive trends, Bitcoin faces the possibility of a significant correction soon. Currently, Bitcoin is navigating a potential bull flag pattern, a continuation pattern that began forming in March following a peak of about $73,800.

As Bitcoin tests the upper trendline of this flag pattern, the lack of sufficient trading volume raises concerns about the sustainability of the breakout. Should Bitcoin fail to maintain its current trajectory, the next critical support level lies along the flag’s lower trendline and the 200-day exponential moving average (EMA), approximately at $53,970.

Conversely, a successful breakout above the flag could propel Bitcoin’s price towards $84,000 by June, marking a 25% increase from current levels, based on traditional technical analysis methods.

Tether’s Influence on Market Liquidity

In a related development, Tether (USDT), the largest stablecoin by market capitalization, has injected $1 billion into the market to accommodate growing demand. This new capital has heightened the liquidity in the cryptocurrency market, potentially mitigating the risk of a steep Bitcoin crash in the upcoming weeks.

Historically, injections of USDT have correlated with significant price movements in Bitcoin, such as the surge from $27,000 to $73,000. With the latest minting, the stablecoin’s market cap has surpassed $110 billion, reflecting heightened sideline capital that could be directed towards Bitcoin and other cryptocurrencies.

Disclaimer: BlockNews provides independent reporting on crypto, blockchain, and digital finance. All content is for informational purposes only and does not constitute financial advice. Readers should do their own research before making investment decisions. Some articles may use AI tools to assist in drafting, but every piece is reviewed and edited by our editorial team of experienced crypto writers and analysts before publication.
Tags: Bitcoincrash
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Matoy

Matoy

If Matoy is not busy looking at the latest Web3 news, he's always in the kitchen cooking delicious meals for his family. He's also a competitive fighting game player and a car enthusiast

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