Bitcoin (BTC) has surged back to $62,000, just days after the sharp selloff on Monday, August 5, which saw BTC drop from $64,000 to a low of $49,500. Bitcoin has since recovered most of the drawdown. On August 8, Bitcoin briefly touched $62,510 before settling at $61,068. According to CoinMarketCap data, the asset is up over 25% from the lows reached on August 5, although it has still declined by 5% in the past 7 days.
This rapid recovery follows Bitcoin's drop below the key support level of $50,000 on August 5, marking its first dip below that threshold since February. The swift rebound has led some traders to speculate that the price dip might have been a bear trap, a strategy where traders temporarily lower the asset’s price to trap short-sellers. Pseudonymous trader Byzantine General described the week's events as "probably the most epic bear trap I've ever seen" in a post on X.
The sentiment among traders has shifted, with futures markets now heavily favoring long positions. CoinGlass data shows 52.48% of positions are long, compared to 47.52% short. However, a significant amount of leveraged long positions could be at risk if Bitcoin falls below the critical $60,000 level again. Despite the optimism, some analysts remain cautious. Markus Thielen, head of research at 10x Research, suggested aiming for Bitcoin prices in the low $40,000s to time the next bull market entry effectively.
Meanwhile, Morgan Stanley, the largest wealth manager in the U.S., has authorized its 15,000 financial advisers to recommend Bitcoin exchange-traded funds (ETFs) to clients, potentially boosting market confidence.