Bitcoin rebounds above $34,000, but it’s too early to call a bottom

Cryptocurrency investors got little respite on June 22 as the price of Bitcoin plummeted to below $30,000 for the first time since January 2021, sparking panic among new and inexperienced market entrants who have yet to go through a full crypto market cycle.

While Bitcoin has been facing increasing pressure from multiple sources since early May, the latest round of selling has been largely attributed to the capitulation of Chinese miners shutting down operations due to regulation.

According to data from QKL123, after Bitcoin fell to $28,800, the price of Bitcoin finally rebounded above $30,000 on June 23 and is currently trading around $34,000, rebounding more than $5,000 from its lows.

The strong rally came following comments from Brian Nelson, the current nominee for undersecretary of the Treasury Department’s Terrorism and Financial Crimes Division, who said he would prioritize implementing new regulations around cryptocurrencies if he were appointed.

China's crackdown on miners sparks market turmoil

Élie Le Rest, partner at digital asset management firm ExoAlpha, highlighted the pressure facing Bitcoin and the entire cryptocurrency market. “Chinese market participants have been selling heavily over the past month,” Le Rest told Cointelegraph.

Le Rest also noted that "on the other hand, the Grayscale fund unlocking schedule led to greater selling pressure," leading to some panic selling among inexperienced traders in the market.

Le Rest said,

“As newcomers to the crypto market see their profits and capital wiped out by the wave of selling, newcomers are taking on the losses as they can no longer withstand such large negative swings.”

As a result of these selling pressures, Le Rest believes that the market could fluctuate between “$25,000 and $35,000” in July, while the low volumes typically seen in August have the potential to “accelerate this downward trend or establish an upward trend.”

David Lifchitz, managing partner and chief investment officer at ExoAlpha, said that due to today’s rapid rebound, the activity seen in the market on June 22 “appears to have put a floor in the $29,000s for BTC and $1,700 for ETH, respectively.”

That being said, Lifchitz warned against acting rashly and caution is needed as the volatility of the cryptocurrency market makes picking a bottom extremely challenging.

Lifchitz said:

“However, it is too early to tell if this is the ‘bottom’ or just a temporary bottom. The current lack of any upside catalysts (aside from some contrarian oversold indicators) remains the biggest obstacle to a crypto rally….”

Altcoins see double-digit losses

The altcoin market followed Bitcoin’s sharp drop on June 22, with most altcoins seeing double-digit losses as traders opted to switch to stablecoins to reduce risk.

As ETH rebounded alongside BTC’s price today, it helped erase the previous 15% correction and pushed the price back above $1,900.

According to QKL123 data, as of press time, the overall cryptocurrency market capitalization is now $1.35 trillion, with Bitcoin accounting for 46.8% and Ethereum accounting for 17.1%.