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Bitcoin’s recent price action saw a dramatic surge to near $107,000, followed by a swift 4% correction. This “liquidity grab” temporarily squeezed out short sellers and trapped late long positions, creating a classic market pattern. While the May 18th daily and weekly closes marked Bitcoin’s highest ever, analysts express caution, advising against long entries at current resistance levels above $100,000. Despite the correction, bullish signals persist on higher timeframes, with the retest of the 50-week EMA in April historically preceding new all-time highs. Some predict a rise to $116,000 in the coming days.
The highest weekly close ever, around $106,500, fueled optimism among traders, despite the subsequent downturn. The market’s ability to close above key Fibonacci extension levels for two consecutive weeks is considered a significant positive. Support for continued bullish momentum comes from the observation that buying pressure has increased while selling pressure has decreased. However, rapid increases in spot volumes on Binance, which handles the largest share of global trading volume, have historically coincided with local market tops. Therefore, monitoring volume delta is crucial to assess the sustainability of any price breakouts.
Macroeconomic factors also influence Bitcoin’s price. While a lack of significant data releases this week keeps the focus on the Federal Reserve and US trade deals, the recent Moody’s US credit downgrade and the weakening US dollar could positively impact Bitcoin and altcoins. The correlation between crypto and US stocks remains a subject of debate, with analyses showing both short-term negative and long-term positive correlations. This uncertainty, coupled with Bitcoin’s increasing sensitivity to stock market volatility, adds complexity to the market outlook. Overall, while the highest ever weekly close is a significant milestone, caution and careful analysis of market indicators are advised.
