The Bitcoin price (BTC) rallied to around $7,300 on Apr 3, and BTC is still belongings onto the $half dozen,700 back up level, meaning the cost could push the dominant cryptocurrency to the $8,000 surface area. Only, a highly accurate hedge fund manager's stock market warning could rattle the cryptocurrency market in the curt-term.

Dan Niles, the founding partner of Alpha I Capital Partners, said in a annotation to clients that the dire economic consequence of the coronavirus pandemic could lead to a steeper correction in the U.Southward. stock market place.

With Q2 earnings ready to be released in the coming weeks, jobless claims exceeding 10 million, and major European economics in free fall, the appetite for high-gamble avails that include single stocks and crypto avails could fade once once more.

Fakeout rallies take occurred frequently in 2022

Every bit Cointelegraph previously reported, prominent trader PentarhUdi predicted the Bitcoin price to recover from $five,200 to the 200-week simple moving average (SMA) at $eight,500 before it eventually grinds back downwards to the $3,000 region.

The design of a strong rally leading straight to an intense selloff has already been seen multiple times in the past 12 months. This is the result of Bitcoin'south price abruptly surging in a short period of time and shaking out tardily shorters in the market. This gives whales time to adapt their positions, often leading to a severe correction after.

Since late March, the Bitcoin price has broken out of its correlation with the U.S. stock market. Previously, BTC closely followed the move in the U.South. stock market, going as far every bit reacting to pre-marketplace trading of the Dow Jones Industrial Average.

As such, even if the toll of Bitcoin sees a big upside movement to the $vii,700 to $8,500 range in the curt term, the toll remains vulnerable to a pullback to the $3,000 to $5,000 expanse.

BTC USDT daily chart. Source: TradingView

BTC USDT daily chart. Source: TradingView

Bitcoin's V-shape recovery makes it vulnerable

The March 12 drib to $3,750 could have technically caused the Bitcoin price to flash crash to zilch every bit discussed by a few industry executives. Fortunately for investors, the price impressively rebounded from $3,600 to $vi,700 with barely any pullback apart from a brief wick down to $4,400.

The stock market also demonstrated a similar V-shape recovery every bit Bitcoin, prompting renowned strategists to predict a deeper correction in the upcoming weeks.

Niles said about the stock market:

"I sort of laugh when I hear people talking nigh a 5-shaped recovery because we are going to have at least x% unemployment, my guess is closer to 20% earlier all of this is said and washed."

Liquidated longs remain a threat

The same statement for the lack of strength of a Five-shaped recovery in the equities market tin exist applied with Bitcoin. Given that the cryptocurrency has not established stiff support levels during its recovery to the $vi,700 to $7,300 range, information technology faces a risk of a March 12-esque fall where a pregnant corporeality of long contracts are liquidated in a short flow of fourth dimension.

A long accumulation stage, in contrast to a V-shape recovery, allows spot volume to grow and actual retail investors to purchase into the marketplace, rather than highly-leveraged futures orders affecting the brusque-term price tendency of BTC.