beware of a dead cat bounce

 beware of a dead cat bounce

The Bitcoin price is having a dead cat bounce after experiencing its worst crash this year. BTC is trading at $30,500, which is above this week’s low of $25,300. It is significantly lower than its all-time high of almost $70,000. So, will this recovery hold?

Bitcoin recovery

The BTC price has made some gains in the past few hours as investors rush to buy the dip in the coin. Many of market participants believe that the coin has gotten extremely cheap considering that it has had its worst week this year.

A closer look at the market shows that the BTC recovery mirrors that of the stock market. In the past two days, technology stocks have been a bit positive following some notable developments. The Nasdaq 100 index has risen from the intra-week low of $11,700 to $12,213. Recently, we have seen a close correlation between tech stocks and digital currencies.

Further, Bitcoin price has held steady since Tether has held quite well. On Thursday, the stablecoin lost its peg for a while, causing many investors to worry about its future. This happened as the Terra USD stablecoin continued struggling.

Learn more about how to buy Bitcoin with PayPal.

Another reason why Bitcoin is doing well is that many big investors seem to be holding their stakes in the coin. For example, in an interview with CNBC on Thursday, Bill Miller, a legendary investor, said that he was still holding his assets. Similarly, other investors like Tesla and MicroStrategy are yet to sell their stakes.

Still, investors should take this rally with a grain of salt. Historically, assets tend to bounce back briefly after a major sell-off. This happens as investors buy the dip. In most cases, the relief rally, which is often known as a dead cat bounce, tends to ease.

Bitcoin price prediction

The four-hour chart shows that the BTC price formed a hammer pattern on Thursday. In price action analysis, this is one of the most reliable bullish reversal candlestick patterns. The coin is now stuck at the 25-day moving average while the Relative Strength Index (RSI) has pointed upwards.

Therefore, there is a possibility that the Bitcoin price will keep rising during the weekend especially if the Nasdaq 100 index closes in the green. However, in the coming days, there is a likelihood that the pair will resume the downward trend in the coming week.

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