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Bitcoin Rebounds Toward $60K, but Choppiness Likely to Persist: Analysts

Bitcoin Shows Signs of Recovery, Heading Towards $60K Amidst Market Uncertainty: Analysts

Cryptocurrencies have bounced back on Tuesday, with bitcoin making a notable climb of nearly 3% to reach around $58,000. This rebound comes as fears surrounding last week’s significant drop in price begin to dissipate. The recovery is not limited to bitcoin alone, as the CoinDesk 20 Index, a market benchmark, has also seen a 2.4% increase over the past 24 hours. Leading the gains are solana (SOL), filecoin (FIL), as well as native tokens of Avalanche (AVAX) and Internet Computer Protocol (ICP).

However, experts caution that while bitcoin may reach the $60,000 mark in the short term, this rally is expected to be short-lived. Markus Thielen, founder of 10x Research, suggests that although a base is forming around the $55,000 to $56,000 range from a technical analysis standpoint, any bullish countertrend rally will be temporary due to the medium-term technical damage. Thielen predicts that bitcoin could rally back to nearly $60,000 before experiencing another decline to the low $50,000 range, creating a complex trading environment.

Adding to the challenges faced by bitcoin are the historical weak returns often seen in the third quarter. Vetle Lunde, a senior analyst at K33 Research, highlights the impact of this weak seasonality, which coincides with the German state of Saxony selling seized assets and the ongoing distribution of Mt. Gox refunds. Lunde estimates that throughout the summer, the market will need to absorb the sale of 75,000 to 118,000 BTC from Saxony and Mt. Gox customers, amounting to a value of $4.3 billion to $6.8 billion at current prices. Consequently, Lunde expects these flows to impact performance in the months ahead, prolonging the choppy market conditions until October.

As bitcoin continues its upward momentum towards $60,000, market analysts remain cautious about the sustainability of this rally. They point to technical damage, weak seasonality, and forthcoming asset sales as factors that could contribute to ongoing market uncertainty in the near term.