The price of Bitcoin fell sharply after Binance and Coinbase rose to nearly $18,500. The reason for the plunge was a large number of sell orders on both spot and futures exchanges.
BTC/USD 15-minute chart Source: TradingView.com
As previously reported by Cointelegraph, traders expect Bitcoin prices to pull back as they approach the resistance zone of $18,000 to $19,000. When Bitcoin prices retested the region for the first time in nearly three years, the market reacted strongly.
Confirmed that $18,500 is a key resistance level for Bitcoin in the near term
There are two main reasons for Bitcoin’s rapid decline near $18,500, which has led to a larger correction for other cryptocurrencies such as Ethereum (ETH).
First of all, $18,500 is still the biggest resistance level for Bitcoin prices before reaching a new all-time high of $20,000. Therefore, this is a key area that sellers are interested in defending, as a breakthrough of $18,500 will increase the likelihood of a rise.
Second, because Bitcoin tests an important resistance area, the vast majority of Bitcoin addresses are profitable. According to IntoTheBlock data, 99% of BTC addresses are now profitable. This increases the possibility of a pullback triggered by a profitable sell-off.
Based on Bitcoin’s rebound in the past two hours, it is likely that a large number of investors will buy on dips. Bitcoin fell as low as $17,214 in Binance, and then immediately rebounded to over $17,600.
Bitcoin’s hourly chart shows that the 20-day moving average (MA) is hovering at $17,586. If Bitcoin stays comfortably above this level, the probability of a sustained rebound will increase.
Dan Tapiero, co-founder of 10T Holdings, expressed confidence in Bitcoin’s medium-term prospects. He said that large investors or savvy investors are likely to buy on dips. He wrote when referring to the Bitcoin weekly chart:
“In life, you rarely see such a chart. Bitcoin is about to break through highs. The real fundamentals are driving prices up, not retail investors in 2017. Big companies will now buy on dips. ”
Bitcoin weekly price chart Source: Bloomberg, Dan Tapiero
The popular Bitcoin trader John Wick echoed this view. Wick said that Bitcoin is experiencing profitable selling, but it is still uncertain how long the bears can bear the pressure. He said:
“Bitcoin has already seen a profitable sell-off. Let’s see how far the bears can push this downtrend and then buy it back.”
What will happen next with Bitcoin?
The anonymous trader “Bitcoin Jack” stated that this dominant cryptocurrency is approaching the “end” of its short-term cycle. Bitcoin still has some upside after the recent correction. But he pointed out that more bulls may be stuck, which could lead to another decline.
The trader explained: “I think the ending is correct. Some upside may squeeze the early shorts and induce more longs to fall into the trap. Then applaud and hit the trap with a bang.”
Considering that after Bitcoin fell, the hourly average moving average remained strong, so the possibility of a rebound is greater than a sharp drop.
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