Bitcoin rebounds to $105K, but is a 'bull trap' underway?

Key takeaways:

• Leveraged bets and a bull trap setup drove Bitcoin's driblet to $100K.

• Recession fears and custody doubts support Bitcoin from reclaiming $110K.

Bitcoin (BTC) climbed toward $105,000 connected June 6 aft plunging to its lowest level successful 4 weeks the erstwhile day.

Traders questioned whether the crisp diminution had been coordinated, particularly pursuing reports that US President Trump and Chinese President Xi Jinping had resumed discussions implicit import tariffs.

The reasons down Bitcoin’s abrupt driblet connected June 5 mightiness ne'er beryllium afloat clarified. Still, respective contributing factors emerged, including fears of a imaginable economical recession, continued uncertainty surrounding the US Strategic Bitcoin Reserves, and speculation that custodians mightiness beryllium engaging successful re-hypothecation practices.

If these concerns are valid, a speedy instrumentality to the $110,000 level appears unlikely.

Hyperliquid whale and Elon Musk’s interaction connected Bitcoin

According to immoderate analysts, including X idiosyncratic SuperBitcoinBro, the driblet to $100,430 connected June 5 was chiefly triggered by excessive bullish leverage from “degenerate” traders. These leveraged bets followed the liquidation of a ample presumption held by the alleged Hyperliquid whale adjacent $104,000. 

12-hour Bitcoin futures liquidations, USD. Source: CoinGlass

This trader, known by the pseudonym “James Wynn,” reportedly incurred losses exceeding $100 million wrong a week.

Source: X/SuperBitcoinBro

SuperBitcoinBro noted that traders expecting an contiguous rebound successful Bitcoin’s terms were blindsided, arsenic experienced marketplace participants had already anticipated the ensuing buying pressure. This maneuver, often referred to arsenic a “bull trap,” thrives connected overconfidence from buyers, particularly aft an unexpected terms dip.

While the nationalist feud betwixt Elon Musk and US President Donald Trump has drawn sizeable attention, linking the quality straight to Bitcoin’s diminution is difficult. The S&P 500 closed down conscionable 0.55% connected June 5, a humble determination that doesn’t suggest wide marketplace distress.

Economic recession risks and speculation connected Bitcoin custody

Bitcoin traders stay acrophobic that a looming planetary economical slowdown could pb investors to go much risk-averse. Data from the US Department of Labor showed that play unemployment claims roseate to their highest level successful 8 months during the last afloat week of May.

Additionally, US Federal Reserve Governor Adriana Kugler stated that tariffs airs “downside risks to employment and output growth.”

Source: X/jpthor

Investor sentiment was further shaken by disappointment with Michael Saylor and his steadfast Strategy aft they declined to disclose their onchain Bitcoin addresses.

This deficiency of transparency sparked renewed speculation that immoderate custodians mightiness beryllium engaging successful re-hypothecation, utilizing the aforesaid Bitcoin collateral aggregate times to unafraid antithetic fiscal commitments.

There is nary grounds of wrongdoing among large custodians specified arsenic Coinbase Custody oregon Fidelity Digital Assets, some of which are taxable to regular audits. More likely, investors are searching for reasons down Bitcoin’s terms weakness contempt continued inflows from organization buyers similar Strategy, GameStop, Metaplanet, Semler Scientific, and Méliuz.

Related: The concealed representation whales usage to liquidate you (Learn however to work it)

Investor vexation has grown arsenic 3 months person passed since the announcement of the US Strategic Bitcoin Reserves, with nary meaningful developments since.

Similarly, though determination person been incremental regulatory changes allowing banks to connection integer plus custody, spot exchange-traded money (ETF) products inactive deficiency cardinal features specified arsenic in-kind redemptions and staking mechanisms.

Fundamentally, the aforesaid concerns that triggered Bitcoin’s driblet to a debased of $100,430 connected June 5 stay unresolved. Traders proceed to interest astir a imaginable economical recession, the anticipation of custodians engaging successful re-hypothecation of Bitcoin, and the ongoing deficiency of clarity regarding the relation and implementation of the US Strategic Bitcoin Reserves.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.