Is the Bitcoin Rebound a Flash in the Pan? Experts Warn of Bull Trap!

Is the Bitcoin Rebound a Flash in the Pan? Experts Warn of Bull Trap!Despite Bitcoin's surge on Thursday, the move may just be a short-lived bounce based on this year's trading pattern. While investors are hopeful about fundamental tailwinds, such as the stock market continuing to climb to new highs, both US presidential candidates taking positive stances on crypto, and the Fed's recent rate cut, Bitcoin's price action has been disappointing

Is the Bitcoin Rebound a Flash in the Pan? Experts Warn of Bull Trap!

Despite Bitcoin's surge on Thursday, the move may just be a short-lived bounce based on this year's trading pattern. While investors are hopeful about fundamental tailwinds, such as the stock market continuing to climb to new highs, both US presidential candidates taking positive stances on crypto, and the Fed's recent rate cut, Bitcoin's price action has been disappointing.

Since hitting an all-time high above $73,000, Bitcoin has been in a lackluster pattern, repeatedly making lower highs for six months.

"If we had been told in March that the S&P 500 would be above 5700, we would have thought Bitcoin would be close to $100,000," WolfeResearch's Rob Ginsberg noted in a report on Wednesday. "Instead, the opposite has happened... It's fair to say that cryptocurrencies have been in a bear market since March, even as the market climbed to new highs."

Data shows that Bitcoin is down 13% from its all-time high on March 13, while Ethereum has declined 34% in the same period. In contrast, the S&P 500 index has climbed 11% during this time, and gold has surged 22%. Although Bitcoin has gained 50% this year, considered to be in a bull cycle since March 2023, this performance is still muted compared to other assets.

Many traders are pinning their hopes on the Bitcoin halving event in April this year, the popularity of the Bitcoin ETF launched in January, and other macro and micro catalysts to drive the price surge. Historically, post-halving peaks have typically occurred about 18 months after the supply reduction event. However, Ginsberg is skeptical.

"We've repeatedly discussed the defensive risk environment, and this is just another indication of a lack of willingness to invest in highly speculative assets," he said. "Even with favorable SEC rulings, institutional adoption, and now rate cuts, it appears nothing is enough to propel Bitcoin to the next higher level."

Of course, cryptocurrencies could still benefit from a fourth-quarter seasonal uptick. October and November have historically been the best-performing months for Bitcoin, and investors expect many uncertainties to be resolved after the November election. However, Ginsberg remains cautious.

"We will continue to hold a bearish bounce view until we see a significant breakout and a reversal of the downtrend," he said.

Despite the recent surge in Bitcoin, experts are cautioning investors to be wary of the possibility of a bull trap. With fundamental tailwinds failing to deliver a significant price boost, Bitcoin may be experiencing a short-lived bounce and could ultimately revert to its bearish path. Investors should carefully monitor market dynamics and make investment decisions based on their individual risk tolerance.