Bitcoin Price Recovers as Market Awaits Relief from Recent Sell-Off

Bitcoin (BTC) experienced a notable rebound, rising above $81,000 on March 11 after US stocks faced a harsh sell-off that had pushed prices to four-month lows.

BTC/USD 1-hour chart. Source: TradingView

BTC Price Rises Amid Speculations of Short Squeeze

According to data from various market analysis platforms, Bitcoin's price registered gains of nearly 4% on this particular day. The previous trading session on Wall Street had been challenging, driven by growing recession fears that led many investors to pull back from riskier assets.

During that session, the S&P 500 dropped by 2.7%, while the Nasdaq Composite Index fell by an even steeper 4%. At the time of this report, Nasdaq 100 futures had managed to recover slightly, improving approximately 0.4% from their lowest levels since September 2024.

Market commentators, including The Kobeissi Letter, highlighted that this downturn might be unsustainable, raising the question: "Are we overdue for a massive short squeeze?" They noted that risk-asset sentiment was in a phase of "extreme fear." Even market bears anticipating a prolonged downturn would likely need to see some form of relief rally. Historically, markets do not maintain a straight line, and a short squeeze seems almost inevitable.

Nasdaq 100 futures 1-day chart. Source: TradingView

Market analysis also pointed to elevated readings on the VIX volatility index, further supporting arguments for a potential revival. Timothy Peterson, an economist known for his Bitcoin forecasting tools, noted that the VIX was higher than it has been 89% of the time since 1990, suggesting a significant likelihood that the recent lows might represent a bottom.

VIX volatility index. Source: Timothy Peterson

Future Outlook for Bitcoin: Cautious Optimism and Challenges Ahead

Following a dip to $76,600 on Bitstamp, Bitcoin displayed some much-needed upward movement on shorter timeframes.

Related: Major Weekly Volatility: Key Insights into Bitcoin's Performance This Week

Trader Cas Abbe indicated the presence of a bullish divergence on the 4-hour timeframe, suggesting that while this movement may not mark a complete reversal, a short-term increase seems likely.

BTC/USD 4-hour chart with RSI data. Source: Case Abbe

Additional insights from trader Rekt Capital pointed towards monitoring the daily chart for similar RSI signals, which could hint at a more sustained recovery for Bitcoin's price. However, some market participants remain pessimistic about Bitcoin's future, predicting that BTC/USD might struggle to reach its all-time highs again. A trader under the pseudonym HTL-NL commented that current market struggles are not exclusive to cryptocurrencies, linking them to an overall trend affecting risk-related assets amid economic uncertainties.

BTC/USDT 1-day chart. Source: HTL-NL

Another post associated with HTL-NL emphasized that this downturn reflects broader market conditions and hinted at challenging times ahead for the US economy.

S&P 500 futures 1-day chart. Source: HTL-NL

It is important to note that this article does not offer any investment advice or recommendations. All trading and investment decisions carry risks, and readers should conduct thorough research before making financial choices.

Bitcoin, Stocks, Market