Bitcoin and other altcoins like Bonk, Floki, and Pepe crashed on Friday as concerns about geopolitics rose. BTC price plunged to $102,000, and then bounced back above $105,000.
Other top altcoins like Bonk, Floki, and Pepe also plunged, with the total market cap of all coins dropping to $3.2 trillion. This article explains why these tokens may bounce back in the coming days.
Bitcoin and altcoin crash was a knee-jerk reaction
The first main reason why Bitcoin and altcoins like Pepe, Bonk, and Floki may bounce back is that the crash was a knee-jerk reaction or an overreaction.
Historically, risky assets like stocks and cryptocurrencies plunge whenever there are significant black-swan events.
A good example of this is when they crashed at the onset of the Covid-19 pandemic in 2020. Most of them plunged as investors predicted the “end of the world.”
Most recently, Bitcoin and these altcoins plunged when Donald Trump delivered his “Liberation Day” speech introducing “reciprocal” tariffs on all countries, including allies and foes.
Bitcoin crashed to $74,500 after Trump introduced tariffs, triggering a bigger dive among other altcoins.
Another notable event was the crypto market crash that happened in late 2022 following the collapse of FTX. Bitcoin and other altcoins bounced back after that.
Bitcoin demand and supply is supportive
The other main reason why Bitcoin and other altcoins may bounce back soon is that the demand and supply is supportive.
Data shows that spot Bitcoin ETFs had net inflows of over $86 million on Friday, bringing the cumulative total to over $45 billion. BlackRock’s IBIT had net inflows of $288 million on Thursday, which was offset by a $197 million outflow from Fidelity’s fund.
IBIT now has over $72 billion in inflows, while Fidelity’s FBTC has $21.1 billion, while Ark Invest has $5 billion.
Spot Ethereum ETFs are also attracting substantial inflows. They had net inflows of over $112 million on Thursday, with BlackRock’s ETHA having inflows of $101 million. It has brought its net assets to $4.5 billion. These funds have had inflows in the last five consecutive weeks.
At the same time, their supply on exchanges have plunged this year. Bitcoin supply on exchanges has dropped to 1.1 million from the year-to-date high of $1.5 million. The supply of Ethereum also continued to fall this year.
Therefore, the ongoing demand and supply metrics mean that Bitcoin price will bounce back this year. If this happens, other altcoins like Pepe, Bonk, and Floki will surge.
Bitcoin price cup and handle
The other main reason why Bitcoin price will bounce back in the coming weeks is its strong technicals. The daily chart shows that the coin formed a double-top pattern at $109,200.
It then formed a rounded bottom, confirming the cup section of the cup-and-handle pattern, a popular bullish signal. It is now forming the handle section of this pattern.
The cup section has a depth of 30%. Measuring the same depth and the upper side of the cup-and-handle pattern gives it a target of $143,000. It has also moved above the 50-day and 100-day Exponential Moving Averages.
Therefore, the coin will likely bounce back in the coming days. Such a move will then trigger more gains among altcoins.
Read more: Top 3 altcoins to buy the dip in as the crypto crash accelerates
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