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Traders are discussing the future of BTC after Bitcoin’s price dropped to $ 8,600

June 3, 2020

The price of Bitcoin (BTC) on BitMEX suddenly dropped from $ 10,000 to $ 8,600 as almost $ 140 million was settled from long contracts. The withdrawal occurred just 16 hours after the BTC rose to $ 10,473, testing the feared level of resistance of $ 10,500.

Bitcoin tends to be more volatile as it approaches key dates. Crucial periods in the cryptocurrency market are the maturities of CME futures and the closing of a weekly or monthly candle.

The 14% price drop that occurred in just five minutes occurred on the horizon with no expiration date for futures or options. Cryptocurrency trader Hsaka stressed the sudden surge in volatility collapsed with “no daily, weekly or monthly closings”. There is no maintenance of the exchanges. Important options do not expire. CME futures do not expire. “

Traders are discussing the future of BTC after Bitcoin’s price dropped to $ 8,600Traders are discussing the future of BTC after Bitcoin’s price dropped to $ 8,600

The intensity of the decline in BTC in a central area of ​​$ 10,500 without other catalysts like news or key events shows that Bitcoin has simply broken out of a multi-year resistance level. In the short term, the main operators remain divided. Some claim that the price of Bitcoin could fall in the $ 6,000 to $ 7,000 range. The main reason for forecasting a sustained downward trend is the fact that recent price movements have destroyed BTC’s short-term market structure. Others believe Bitcoin is likely to recover to $ 9,400, which has historically been a strong support level, and will test again at $ 10,500.

Bitcoin’s bearish scenario

Technically, the drop in Bitcoin prices from $ 10,000 to $ 8,600 was a perfect solution for liquidity. BTC has been between $ 8,600 and $ 10,000 since May 14. In a single five-minute candle, BTC recorded both the highs and lows of the area. Crypto Trader Cred said::

“Still in the daily range ($ 8,600 support, $ 10,000 resistance). Testing the mid range + monthly S / R at $ 9300. The failed breakout usually leads to an opposite limit, so I’ll try to bottom out at $ 9300 sell if it fails. Bored but you need to watch the $ 9,300 events before you trade. “

Bitcoin’s bearish short-term scenario is fairly simple: Decline USD 9,400 and drop below USD 9,000 to lower the level of support. The $ 9,400 level has served Bitcoin as an important denial or recovery area since early May. A clear breakdown below would indicate that BTC’s short-term trend has changed.

Traders like tequila sauce they pointed to it Bitcoin price is likely to reject higher resistance levels like the $ 9,900 as it sees a recovery in relief after a brutal correction. In this case, For the third time since mid-2019, this would mean a rejection of the $ 10,500 resistance level. Increases the likelihood that a new downtrend will begin.

Bitcoin traders known as DonAlt said that BTC is now on the verge of falling into lower support areas, including $ 7,700 and $ 6,400. With both breakout attempts ending at $ 10,500 in October 2019 and February, the trader emphasized the possibility of short-term “triple-top” formation printing.

A possible triple top forming on Bitcoin's weekly chart

Speaking to Cointelegraph, technical analyst Eric Thies said he advocated a short-term bullish scenario. But If Bitcoin’s price drops again by $ 10,000 and falls below $ 9,000, Thies may drop to $ 7,000 in the third quarter of this year, according to Thies.::

“If BTC cannot claim $ 10,000, the cap will eventually drop to $ 9.5,000 and cause us to possibly drop to $ 7,000 in the summer.”

The recent correction also harbors the risk that the monthly candle will move down in June.

Bitcoin monthly candle at risk of becoming bearish

If the price of Bitcoin continues to drop to $ 8,000, there is a chance that a monthly candle similar to that of February will be printed, which will drop to $ 3,600 the following month. This gives BTC the opportunity to see a correction lasting several months.

Crypto chartist Dave the Wave He suggested that BTC could see a consolidation period that would last until September Similar to previous declining trends from late 2019 and early 2020.

Bearish fall for Bitcoin in the second half of 2020

In the past, Bitcoin has tended to perform well in the second quarter of each year. In the third and fourth quarters Bitcoin often withdraws and sees a three-month correction.

The bullish scenario for Bitcoin

Bitcoin’s short-term bullish scenario is to set and stay above $ 9,400 as a support level to go over $ 10,500 again. Thies said to Cointelegraph:

“If BTC claims $ 10,000 in the short term without falling below $ 8,600, we will see $ 11,000 after that, and ideally we will retest $ 10,000 before going further up, given the current level I hope available technical data as [el escenario alcista], with the bulls shortly getting back $ 10,000 and then gaining momentum to move forward. “

Likewise, the Bitcoin trader Satoshi Flipper, established a bullish pattern for Bitcoin to retest $ 10,500. But would require BTC to stay above $ 9,400 and show strength in an important support area.

A potential bullish scenario for Bitcoin in the near future

Matthew Ficke, head of market development at OKCoin, told Cointelegraph this The perception of Bitcoin as a hedge against inflation and government influence is increasing, which can make Bitcoin more attractive::

“BTC’s $ 10,000 withdrawal coincides with civil and economic unrest in the United States. Some argue that the environment reminds the market that BTC can act as a hedge against excessive government influence. Because the stocks are close, Off In the perspective of the refuge, many cryptocurrencies seem to be relatively attractive. “

Ideally, the volume of the Bitcoin spot market needs to keep its momentum for the upward trend to continue. Until now, With large spot exchanges like Binance, the volume of Bitcoin tether (USDT) has decreased, which could hinder the possibility of a larger breakout above $ 10,500. There is a possibility that the rapid withdrawal has resulted in shaking weak hands, and buyers rely on that. Bitazu Capital’s founding partner, Mohit Sorout, said::

“The market liquidated overfunded Bitmex participants. $ 123 million in short positions, $ 96 million in long positions, all within 24 hours. A healthy recovery of Btc’s mood. Range of a few days , catch the late bears and then bring them back up. “

In all short-term bullish cases, BTC must remain above $ 9,400 and quickly return to the $ 10,000 to $ 10,500 range that appears to be at stake so far.

Variables that can affect the price

The increase from $ 8,800 to $ 10,440 was largely due to futures, and the decrease to $ 8,600 on June 1 was also due to a cascade of liquidations in the futures market, such as: said Economist Alex Kruger:

“Many traders decided that pumping $ BTC last night was a response to Trump’s speech. This was a leverage-driven outbreak. The OI rose even as sales exploded as expected financing and futures -Basis turned extremely, so the leveraged longs were bombed today. No need for storytelling. “

As the sharp retreat shows, the likelihood of a correction increases if the futures market is behind a major rally at a multi-year resistance level. Before the decline to $ 8,600, open positions for BitMEX Bitcoin futures contracts were $ 718 million. The funding rate was also 0.16%, indicating that the vast majority of the market expected BTC to add value.

A study by Coin Metrics also found that the derivatives market is now much larger than the spot markets. For Bitcoin, a balanced volume distribution across futures, options, spot and institutional markets is ideal to see an appropriate bull market. The report said:

“The greatest increase is seen when the mix is ​​expanded to include derivative markets. As with other asset classes, the derivative markets in Bitcoin are many times larger than spot markets. Exposure to derivative markets could be the most efficient way.”

The futures market, which accounts for most of Bitcoin’s trading activity, is a variable that may make BTC vulnerable to a sustained downward trend in the coming months.

Related topics: Cryptocurrency funds on demand as institutions see Bitcoin as a hedge alternative

A big plus for Bitcoin, however, is the increasing institutional acceptance. Since May 11th The investment company Grayscale bought 1.5 times more Bitcoin than in the mining industry and thus absorbed a significant part of the BTC supply in circulation.