After weekend slump, Bitcoin rallies as liquidity returns

Bitcoin rebounds after weekend selloff, defying bullish predictions

We’ve been here before, right? A weekend of fear, red painted candles and the dreaded death-cross for Bitcoin; one analyst is not convinced this end has yet begun to play out.BTC/USD: Could The 62% Fib Level Stop Bears?Grabbing headlines as June comes to a close, one trader lulled these wolves back into their den market’s “capitulation dump” as panic swept through crypto and traditional markets. It wasn’t a fluke; it was the dance everyone did. The macro fears had knocked the market one (last?) time, leverage got a little overextended and when those weak hands were removed they oh tout l’monde let’s go rallied. BTC was double digits in the green within 24hrs and everything else followed.

The headlines proclaimed doom, as they are wont to do. But by Monday the fear was gone. As CryptoSlate put it best, “that drop is steep, but the bounce back comes swift.” And that’s exactly what happened. So what sparked it? The traditional mix of trade chatter, policy jitters and everybody derisking at the same time. Weekends just make it worse. Liquidity disappears, leverage amplifies every move and a bit of panic begets a lot. Then Monday comes, everyone is tapped out and prices get to take a break.

The markets dance to such strange beats. They purge, reset, rebuild. To hell with the leverage, reload the bids. It’s messy, but it’s balance. Sure, the macro headlines will continue to set the tone but it’s all about structure … how levered-up, how thin the books, how brave are buyers. And once the forced selling is exhausted, it’s a game for spot markets. That is when it seems like crypto can breathe a bit. October is supposed to be a bullish month, and although this one entered amid whiplash, the bounce occurred just as you would expect. BTC picked itself up off the mat and ETH confirmed it, and all of a sudden hope did not seem quite so far-fetched.

Can it last? Maybe. But, only if traders are mindful of their leverage and if policymakers stop shaking the snow globe. Just don’t, and we’re setting up for another chop cycle. Short termers will be rocked with the swings; long termers will quietly add and remember patience generally wins.

In the end, the flush was the cleanse. It was scrubbing out greed, fear and noise and giving the market a chance to breathe. Bitcoin didn’t defy gravity it fell to earth precisely as expected.

Because it’s always like that.