Potential Relaxation in Bitcoin Price: The Market is Watching

Following the $20 billion liquidation over the weekend, developments in Bitcoin prices are attracting investors' attention. There is speculation that similar recoveries seen during declines in 2020 and 2024 may occur again. Last week, escalating trade tensions between the U.S. and China triggered sharp waves of selling in the crypto market, resulting in the liquidation of over $20 billion in leveraged positions.

However, as the weekend approached, mild statements from both Washington and Beijing created a fragile atmosphere of optimism in the markets. With these developments, Bitcoin's price increased by 1.3% in the last 24 hours, rising to around $113,000. Ethereum was trading in the $4,100 range, while Solana gained 2.9% and Dogecoin increased by 2.3%. Additionally, the total market capitalization rose again to $3.9 trillion, capturing the attention of investors.

The increase in the Fear and Greed Index from 24 to 38 shows that investors are cautiously returning to the market. FxPro analyst Alex Kuptsikevich pointed out that a sell-off of this size is usually an emotional liquidation event, stating, "Sharp declines usually signal a short-term bottom, but the recovery process takes time."

Analysts' evaluations reveal that Bitcoin’s drop below the 50 and 200-day moving averages has occurred in the same manner as similar declines in 2020, 2021, and 2024. Following these periods, market leverage ratios were reset, paving the way for strong recoveries in the subsequent weeks. However, a similar process in 2022 lasted for months.

The Kobeissi Letter assessed the recent decline as a “technical rather than structural event.” Analyst Frank Fetter emphasized that the market is still far from the overbought zone, suggesting that if volatility remains low, a “relief rally” could be possible. These indicators suggest that there is potential for a controlled short-term recovery in Bitcoin prices. However, experts warn that this process can only continue as long as volatility remains limited.