The price of Bitcoin (BTC) fell below $ 9,000 in a rapid retreat and fell 5% in 48 hours. This event was the seventh drop in cryptocurrency by market cap to $ 8,000 in two months from the beginning of May.. So, Traders are concerned that repeated falls below $ 9,000 could weaken critical support levels.
Meanwhile, Due to the recent decline in BitMEX, only $ 30 million in futures contracts were settled. Futures data indicate that there is a possibility of a significantly stronger decline.
Why did Bitcoin drop to $ 8,000 and what do traders think?
Bitcoin had a significant price move pending after almost two months of low volatility. The direction of the next BTC move was uncertain as the BTC / USD pair was at a crucial point.
Technically, If Bitcoin held above $ 9,200, a new test was possible at $ 9,500 and the resistance levels of $ 10,000 were plausible. Continued testing of the $ 9,000 support level can, however, leave BTC vulnerable to a lower decline.
A cryptocurrency trader called “Cheds”, he showed::
“With a break below 9,000, this last drop invalidates a possible head and shoulder reversal with a break in the right shoulder. The same thing happened on June 25th.”
A 4 hour Bitcoin chart with a Bollinger band. Source: Cheds
On June 25, the price of Bitcoin fell rapidly to $ 8,827, mainly due to a sell-out by several miners. The data from ByteTree, They suggest that some miners have sold more Bitcoin this time than usual.
Last week, 6,619 BTC were mined and 6,809 sold. Miners sold more Bitcoin than they could mine, leaving a negative net inventory of 190 BTC.
The selling pressure that caused BTC to drop from $ 9,250 to $ 8,932 was likely caused by miners and the cash markets. The futures market had a relatively weak impact on Bitcoin’s huge drop in prices given the low short-term processing of BitMEX.
Even so, In order for the bitcoin price to drop to key multi-month support levels like $ 6,000, some traders believe the first BTC should drop below $ 8,000. For example, the Bitcoin trader Pentarhudi wrote in early June:
“Triple cap on the newspaper … bearish pattern. It will trigger a closing price below $ 8,000 with a target of $ 6,000. Either triple cap or limited range.”
If the price of Bitcoin continues to drop to $ 8,000 in the coming days, it would mean a triple cap in a larger time frame. The previous two caps were reached in October 2019 and February 2020 when BTC reached $ 10,500.
A potential triple ceiling for Bitcoin. Source: TradingView.com
In the short term, two variables for BTC
In the last days Bitcoin’s price has shown little correlation with the U.S. stock market. However, in the past three months, BTC and stocks have been moving together most of the time.
The break in the correlation between Bitcoin and stocks shows that the markets are moving due to their respective dynamics. After a trend reversal in the past few weeks, sudden volatility explosions can occur at BTC.