Deja-vu for BTC versus market sentiment as conditions mimic the weeks after the March 2020 COVID-19 crash.
Bitcoin (BTC) returned to $30,500 on May 17 amid hopes that a retest of 2017 highs could be avoided.
$20,000 retest ‘highly unlikely’
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD climbing after the daily close to tentatively build on $30,000.
Still, in a multi-day range, the pair was yet to decide on a meaningful upward or downward trajectory, while volatility ebbed into the new week.
Amid concerns that a major retracement could take it below last week’s ten-month lows, popular analyst Credible Crypto offered a more optimistic alternative. Based on historical norms, he argued on Twitter, thatBitcoin had little impetus to retest $20,000 or lower.
“The argument for 13K-14K $BTC on the premise that past major bear markets have led to 80% declines from the top makes a major assumption- that 65k was the cycle top,” he wrote.
“It’s the same assumption people made at 30k in June ‘21 before we rallied to a new ATH of 65K 3 months later.”
As Cointelegraph recently reported, contingency plans appear to be in place already for such an event, with MicroStrategy — the company with the largest corporate BTC treasury — even prepared to buy up supply to stem the fall.
Asked whether BTC/USD could repeat the retracement from its 2019 highs near $14,000 to the $3,600 floor during the March 2020 COVID-19 crash, Credible Crypto was just as skeptical.
“Not expecting that. Is it possible? Yes, but as I’ve said previously a retest of prior cycle highs has never happened before- so I find it highly unlikely,” he responded.
For Cointelegraph contributor Michaël van de Poppe, it was a question of the United States dollar cooling its bull run versus other fiat currencies in order to give risk assets some breathing space.
The U.S. dollar index (DXY), he forecasted, should come down from its twenty-year highs of 105 points.
“If I look at the current state of the $DXY, I think we’ll follow through with this scenario. Assuming we’ll be seeing some corrective move, the highs have been swept for liquidity. Losing 103.7 points and I think we’ll get more downwards pressure here -> risk-on assets up,” he tweeted on May 16.
Sentiment echoes March 2020 aftermath
Market sentiment data meanwhile reflected the majority consensus across crypto — that anything could now happen, with bias firmly skewed to the downside.
Related: First 7-week losing streak in history ― 5 things to know in Bitcoin this week
The Crypto Fear & Greed Index, a cross-market sentiment gauge, hit 8/100 on May 17, its lowest value since March 28, 2020 — two weeks after the Coronavirus lockdown-induced meltdown.
Then, as now, BTC/USD was already recovering from its lows. At $30,500, the pair was up 28% from the week prior.
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