Bitcoin (BTC) recently took a dip below $101,000, partly due to some drama between Trump and Musk that shook the US financial markets. But within 48 hours, it bounced back to over $105,000 before leveling off. Let’s explore what happened.
Understanding the Rebound
Crypto analyst KillaXBT on X (formerly Twitter) offered some insights into Bitcoin’s recent price action. After hitting a record high near $112,000 on May 22nd, BTC corrected, dropping about 10% to around $100,000. This rebound, KillaXBT argues, wasn’t random.
Several factors contributed:
- Technical Indicators: Things like daily volume imbalances and “Fair Value Gaps” (FVGs) – essentially, price inefficiencies on the chart – played a role.
- Liquidity Sweep: The price drop below previous weekly lows triggered many stop-loss orders (automatic sell orders), creating a sudden surge of liquidity that big players capitalized on.
- Short Squeeze:
Many traders bet on Bitcoin going lower. When the price started rising, these traders had to buy back to cover their losses, further fueling the rally.
What’s Next for Bitcoin?
KillaXBT outlined three possible scenarios:
Scenario 1: Bullish Continuation
If Bitcoin breaks through the resistance zone of $104,800-$106,000 (which aligns with some key Fibonacci retracement levels), it could trap more short sellers and lead to further price increases.
Scenario 2: Retest of Support
If Bitcoin gets rejected at that resistance zone, it might fall back to retest the $100,000 support level.
Scenario 3: Deeper Correction
The worst-case scenario involves a break below $100,000, potentially leading to a retest of support around $97,000.
KillaXBT personally leans towards a continued price increase, suggesting market makers are exploiting the recent rebound and catching short sellers off guard. They caution against jumping into long positions (buying Bitcoin) until a clearer opportunity presents itself.
At the time of writing, BTC is trading around $105,600, up slightly for the day.
