Bitcoin Drops 20% In Four Months, Analysts Predict Second Quarter Rebound

Bitcoin, the leading cryptocurrency, has recently experienced significant volatility, with its price dipping to a four-month low before recovering slightly. Analysts are closely monitoring the market, with some predicting that Bitcoin is nearing a bottom and could rebound in the second quarter. This sentiment is supported by various factors, including the accumulation of Bitcoin by large holders and the potential for a market rebound as indicated by historical trends.

The recent price drop has been attributed to a broader market downturn, with the overall crypto market cap dipping. Despite this, experts believe that Bitcoin and other leading altcoins are at or near their bottom, anticipating a rebound in the coming months. The inclusion of Bitcoin in the government-owned crypto reserve has also been seen as a positive development, as it could help stabilize the market and prevent further sell-offs.

Joel Kruger of LMAX Digital believes that the current weakness in the crypto market is "more of a sell-off effect following news realization and a technical overextended adjustment, rather than other factors." However, the uncertainty in the U.S. economic outlook has triggered a risk-off sentiment in the market. Nevertheless, Kruger still believes that Bitcoin is nearing a bottom and is expected to see a rebound in the second quarter. In the previous resistance range of $69,000 to $74,000, Bitcoin "should receive very strong support."

Analysts have identified key support levels for Bitcoin, with some predicting that the cryptocurrency could bottom around $70,000. This is based on historical trends, which show that sharp declines often precede recoveries. If the price can hold above $78,000, it may form a W-bottom pattern, laying the foundation for a subsequent rebound. The potential for a rebound is further supported by the fact that Bitcoin's price is currently above its 200-day Simple Moving Average (SMA), leaving room for long-term gains.

The market sentiment remains cautious, with some experts advising investors to remain patient during the bearish market. However, there is a growing consensus that Bitcoin and other leading altcoins are undervalued and could see significant gains once the market bounces back. The recent rebound above $80,000 is seen as a positive sign, with some analysts predicting that Bitcoin could surge to the $89,000-$90,000 range over the week.

In summary, while the cryptocurrency market has experienced turbulence in recent weeks, analysts are optimistic about the prospects for Bitcoin. The accumulation of Bitcoin by large holders, the potential for a market rebound, and the inclusion of Bitcoin in the government-owned crypto reserve are all factors that could contribute to a recovery in the second quarter. Investors are advised to remain cautious but also to be prepared for potential gains as the market stabilizes.