Bitcoin (BTC) saw a bounce back after a significant drop at the start of trading on Wall Street on May 26, as the market rapidly used up the available buying support.
Bitcoin Trading Volume Surges with Further Increases Expected
Data from Cointelegraph Markets Pro and TradingView indicated that BTC/USD fell to $28,000 on Bitstamp, marking its lowest level since May 12 and the Terra LUNA incident.
The downward trend had already gained momentum earlier in the day, leading to a liquidity crisis that resulted in $117 million in Bitcoin liquidations within 24 hours.
A subsequent recovery pushed the price back above $29,000, where Bitcoin was trading at the time of writing.
Analyst Michaël van de Poppe believes that the move to fulfill bids will pave the way for a potential uptrend.
Now we’re good to go up as all the liquidity is taken on the downside.
Let’s go!
— Michaël van de Poppe (@CryptoMichNL) May 26, 2022
He maintained his targets for BTC/USD at $32,800 and $35,000.
On the other hand, Material Indicators, an on-chain monitoring resource, highlighted that low liquidity levels may lead to less resistance to a future price decline based on order book analysis.
Fellow trader Il Capo of Crypto, adopting a cautious stance on short-term price movements, anticipated that the current rebound could be a ‘bull trap,’ suggesting a potential return to $25,000 according to order book trends.
The surge in volume on May 26 marked a departure from the trend seen earlier in the week, which had raised concerns among analysts.
Bitcoin’s Recovery Hopes Strengthen Despite Challenges
Looking ahead, market observers were eager for indications of a broader shift in Bitcoin’s trend.
For prominent analyst Root, encouraging signs emerged from the behavior of long-term holders (LTHs) on that day.
The data suggested that LTHs were reducing their BTC sell-offs, indicated by a stabilization in their cost basis. This represents the average purchase price of BTC held by LTH accounts, and a leveling out usually signifies diminishing selling pressure among long-term holders.
In a Twitter post, Root described this data as possibly the most crucial chart for Bitcoin at present.
He emphasized that the recent halt in LTH capitulation signified a change in trend, indicating a shift in selling behavior among specific long-term investors.
The opinions expressed in this article are solely those of the author and do not represent the views of Cointelegraph.com. As with any investment decision, conducting thorough research is recommended.
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