Amid macro risks, Merkle views that the current crypto rally may be driven more by short-term market dynamics than a sustainable shift in fundamentals. Investors are advised to exercise caution with Bitcoin, as analysts warn a sharp price rebound amid escalating geopolitical tensions may be driven more by short-term market dynamics than by a sustainable shift in fundamentals. The latest price move has sparked debate about whether Bitcoin is evolving into a safe-haven asset or entering a new bullish cycle.
Over the past month, Bitcoin climbed from around US$65,000 to $75,000, demonstrating notable resilience compared with traditional asset classes during the Middle East war. Thanalop Preedamanoch, head of investment and fund manager at Merkle Capital, said the current price movement is more likely a “bull trap” than the beginning of a sustained uptrend. The issue is the absence of a strong catalyst.
Historically, major crypto bull cycles have been supported by clear drivers, such as regulatory progress, that attract new liquidity; at this stage, we do not see comparable factors in play. Instead, the recent rally appears to be a technical rebound following a correction of more than 50% from previous highs. Bitcoin’s surge towards $76,000 coincided with a major short liquidation zone that built up over the past 1-3 months, he said.
In such conditions, large market participants can exert significant influence, pushing prices to trigger both long and short liquidations in a relatively low-liquidity environment. Beyond short-term volatility, analysts warn that broader macroeconomic risks remain a key overhang for the crypto market. One major concern is persistently high inflation.
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