Then, on Oct. 2, U.S. President Donald Trump confirmed on Twitter that he had contracted COVID-19. The news quickly rattled financial markets, causing equities to slump and Bitcoin to pull back in tandem. In the span of two days, BTC faced two unexpected macro events that considerably slowed its momentum as it hovered above $10,900. Had the two events not occurred, a retest of the $11,000 resistance level would have been likely.

Now a week later, Bitcoin has recovered above its price level at which the BitMEX and Trump news came to light. The resilience of BTC against two events that could have potentially caused the markets to further plummet is encouraging.

Factors behind BTC’s recovery

There are several key factors that aided the recovery of Bitcoin from the initial drop below $10,500. First, the U.S. dollar has declined in the past 14 days, indirectly causing BTC and gold to rally. Second, the news around Square’s $50 million Bitcoin purchase lifted the overall sentiment. Third, some analysts state that BTC was bullish before the Square news happened, with a favorable technical structure.

When major decentralized finance tokens plunged, it led to nervousness in the market. According to “Light,” a pseudonymous options and futures trader, the short-term recovery of BTC is positive. In the near term, the trader suggested that an uptrend is more likely than a breakdown. “Bitcoin $BTC was already bullish before the Square news with no supply selling bottom of this trendline even as $YFI tried to kamikaze the whole market. Obvious what comes next.”

Compared to MicroStrategy’s $425 million bulk BTC purchase, the $50 million investment is nowhere large enough to solely cause Bitcoin to soar. While Square is an $81 billion conglomerate and $50 million is a decent-size investment, it is not a major bet, although the implications were deemed substantial. Speaking to Cointelegraph, Denis Vinokourov, head of research at crypto exchange and broker Bequant, said the CFTC’s action against BitMEX is also a positive long-term development for Bitcoin:

“Markets do not like uncertainty and this also applies to digital assets, despite the apparent lack of consistent correlation to traditional assets. Some sort of resolution to the election drama in the US will be welcomed and the cleansing of the digital assets ecosystem, this time by the CFTC on Bitmex, is positive for long-term developments in the space.”

Where is BTC heading?

Based on the recent trend of BTC, its pullback in October, and subsequent recovery, traders remain neutral and optimistic. The majority are not largely bearish in the short to medium term due to the strength of the $10,500 support level. If the support breaks down, then the sentiment could change, but it has held up well so far.

Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange and Cointelegraph contributor, said that Bitcoin should first break the $11,000 to $11,200 resistance range, after which “acceleration” could occur. But there is also a possibility that BTC would see a low-volatility range between $10,500 to $11,200 in the foreseeable future.

Van de Poppe also emphasized that Bitcoin is likely in the early phase where smart money and institutions are beginning to enter. Square and MicroStrategy’s bold investments in BTC could lead to an improved perception of BTC as a store of value; at the latest, it’s a bullish sign in the long term for van de Poppe: “The market is in the early stages of Smart Money and Institutional Investors, as MicroStrategy and Square opt-out of the U.S. Dollar and opt-in on $BTC. Very bullish long term.”

Citing the realized volatility of BTC, which recently crashed to 20% for the seventh time in five years, other traders said a volatility spike is expected. Historically, when that has happened, the volatility of BTC spiked to 80% in the several months following. Given the likely upsurge of volatility in the near term, cryptocurrency trader Cantering Clark believes a major price movement is expected: “I think that given this prolonged state of compression that we get a big move before the weekend for $BTC. Either direction, I doubt we get some cookie-cutter retest.”

In the short term, traders expect BTC to successfully retest the $11,000 resistance level and range between $10,500 to $11,000. In the medium term, analysts expect a potential breakout above $11,000, which could establish a broader range between $11,000 and $13,000 in the longer term, with the latter being the major roadblock to an all-time high. The confluence of a favorable technical structure, strong fundamentals as seen in Bitcoin’s hashrate, and growing institutional demand indicates that the general market sentiment remains positive.

This article has been published from a wire agency feed without modifications to the text. Ony the headline has been changed.

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