Bitcoin has rebounded sharply from two-month lows, but how high can price action go before speculators take over?

Bitcoin started the new week with bullish sentiment back on the horizon, returning to $64,000.

Bitcoin price action has staged a thrilling comeback and has already surpassed its latest swing low by a wide margin, rising nearly $8,000 from the depths of last week’s sell-off.

Although some of these gains came over the weekend, they proved to have staying power, and bears failed to push the market lower during the Asian trading session on May 6.

So by the second week of May, the mood was very different – ​​but the increase in greed was already evident.

Can Bitcoin and altcoins maintain sustainable momentum to new all-time highs?

That’s the question traders and analysts will be asking after hitting a two-month low and a sharp sell-off in leverage.

On exchanges, things remain promising, with funding rates neutral and little sign of willingness to go long BTC at current levels.

However, if worse comes to worse, key support levels will face renewed testing. These include the short-term holder (STH) cost basis and the 100-day moving average – both classic bounce levels.

As regular traders recover from a hair-raising start to the month, Cointelegraph takes a closer look at Bitcoin’s current state.

Bitcoin bulls emerge victorious after weekly close

The weekend ultimately posed no threat to Bitcoin bulls, providing some unexpected upside that ultimately held through to the weekly close.

Data from Cointelegraph Markets Pro and TradingView confirms that the price on Bitstamp is around $64,000, which is around $900 higher than at the end of April.

While not a huge weekly candle, the performance represents an impressive comeback for BTC/USD, which had risen to $56,500 during this period.

Unsurprisingly, market watchers remain optimistic.

Popular trader Daan Crypto Trades summarized in his latest review of X: “All liquidity was swept away, falling below the liquidity built up over the past 2 months and then rebounding quickly.”

“We’re still range-bound, but at least we’ve got some upside momentum for next week.”

Tony Severino, founder of cryptocurrency technical analysis platform CoinChartist, noted that last week’s sharp drop had similarities to similar declines during the bull run.

“Every higher swing low for Bitcoin since November 2022 has been a weekly hammer,” he revealed over the weekend.

"Is it different this time?"

In a previous post, Severino added that the price is trying to recapture the upper monthly Bollinger Band – which has been acting as support since February.

“This could be a positive development,” he suggested.

Meanwhile, data from monitoring resource CoinGlass shows that BTC/USD is up 5.8% so far in May, reducing overall losses for the second quarter to under 10%.

BTC price levels materialize

Cryptocurrency markets are notoriously volatile, and emerging trends can quickly fade, dragging down market sentiment.

If Bitcoin’s trajectory changes, traders and analysts will be interested to see to what extent nearby support levels succeed in limiting any new downside.

Michaël van de Poppe, founder and CEO of trading firm MNTrading, was one commentator who highlighted the importance of $60,000, even though the level did not provide much comfort to bulls last week.

“Bitcoin is over $60,000 and retail is not here yet,” he told X followers, referring to the relative lack of publicity surrounding the market’s recovery.

“As long as Bitcoin stays above $60,000, this range is totally fine. Altcoins are slowly waking up.”

As Cointelegraph goes on to report, $60,000 coincides with several trend lines that have been boosting BTC/USD since the bull run began in early 2023.

These include the 100-day simple moving average (SMA) and the STH realized price — the total cost basis of entities that have held the tokens for 155 days or less.

As of May 6, those levels were $60,650 and $59,920, respectively, with the latter figure provided by statistical resource Look Into Bitcoin.

Meanwhile, financial commentator Tedtalksmacro added a 50-day exponential moving average (EMA) in a May 6 research note.

He explained: “The 50-day moving average is $64,000, which is where BTC is currently trading, and recovery of this level is significant in defining the high time frame market structure.”

“Momentum and trend traders look to the 50EMA when riding a trend.”

More U.S. jobs data casts a shadow over the dollar

The week ahead is relatively quiet in terms of macroeconomic data, but recent events provide traders with plenty to monitor.

Late last week, the latest U.S. jobs data provided a boost to risk assets across the board — a topic firmly on the radar of the cryptocurrency space.

With expectations growing that the Federal Reserve will cut interest rates in the coming months, it is no longer a question of “if” but “when” financial conditions will ease.

For van der Poppe, there is even a chance that quantitative easing (QE) will return – with the Fed returning to increase available liquidity.

“In all likelihood, altcoins have already borne most of the pain,” he argued.

“The coming week will be an interesting one and we may see more upward momentum as Friday’s poor economic data points the way for USD and Bitcoin. QE is coming.”

The dollar's strength was hit by the jobs data, with the U.S. dollar index (DXY) falling sharply to its lowest level since April 10.

So when it comes to the timing of a Fed rate cut, attention will be on the May 9 initial jobless claims data.

Leverage ignores BTC price rebound

As Bitcoin approaches $65,000, the mood in the derivatives market is noticeably calm — but like sentiment, that could change in an instant.

Current data shows that Bitcoin’s funding rate is actually neutral, which, according to trading suite DecenTrader, reflects that speculators are licking their wounds.

An X post confirmed: “The Bitcoin funding rate has returned to a more neutral state after turning negative last weekend.”

“The drop below $60,000 scared a lot of traders before prices rebounded.”

Others said the funding rate “remains healthy” after witnessing a “massive reset” to $56,500.

Daan Crypto Trades added: “We hope it stays this way so that it can develop healthily in the next step.”

A cursory look at the Crypto Fear and Greed Index provides potential food for thought. As Bitcoin prices recover, sentiment also shifts from “neutral” to “greed,” with “extreme greed” just around the corner.

The index, a lagging indicator, currently stands at 71/100, compared with just 43/100 on May 2.

Mining difficulty barely retreats from all-time highs

$64,000 is not enough for Bitcoin to avoid a difficulty drop at the next automatic adjustment on May 9.

The second adjustment in the new difficulty era is currently expected to be a decrease of around 1.3%, according to monitoring resource BTC.com.

Raw data from MiningPoolStats confirms that difficulty remains at an all-time high, with hash rate mimicking the feat as miners digest April’s block subsidy halving.

Last week, Cointelegraph reported on the continued resilience of miners, which showed no signs of capitulating despite market volatility.

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