Bitcoin (BTC) has suddenly dropped from $ 11,823 to $ 11,102 in the past 48 hours. While digital assets remain on the uptrend at the macro level, three main factors appear to be responsible for the decline.
The presence of critical resistance at $ 12,000, the profit-taking of several whales and a retest of a key area of support should have fueled the decline.
Bitcoin is fighting in the resistance zone of $ 11,800 to $ 12,500
Since the first week of August, Bitcoin has been trying to break the resistance area from $ 11,800 to $ 12,500. Each of five attempts to break the sharp denial-associated levels of $ 12,500, $ 12,000, and $ 11,800.
One possible reason the $ 12,000 level was a tough resistance area for buyers is because it was a historically relevant resistance area. After February 2018 and July 2019, this is the third time in two years that BTC has tested this resistance zone.
A trader under the pseudonym “DonAlt” said that while Bitcoin could recover, it would be easier to defuse the bears than before. He said:
“You might find temporary relief here, but it still looks very heavy. Bears have easier reversals now than before. If the price drops on a narrow basis $ 11,760, BTC will likely go up. Until then, I’ll assume it will refuse.” “”.
Look at the CME gap
Since Bitcoin price topped $ 10,000 on July 26, it has been above the support range of $ 10,000 to $ 10,500.
Given that the $ 10,000 level has become an important level of support for Bitcoin, there is an opportunity for a full re-test of support. Chain analyst Willie Wu also said a drop below $ 10,900 could fill the CME gap, which stands at $ 9,700.
“The channel we’re in is being tested right now. I don’t think it will go on. I don’t usually set price targets as the trend in the chain is only limited to the trend. But here are my critical support levels based on TA. By the way, if 10900 fails, the lower level 9700 will fill the CME void.
Whales increase selling pressure by taking profits
As Cointelegraph previously reported, a bitcoin whale that bought 9,000 bitcoin in early 2018 made a profit around the $ 12,000 level. At the current price of $ 11,300, Bitcoin 9,000 is worth nearly $ 101.7 million.
Some whales appear to be taking profits as many in the $ 11,500 to $ 12,000 range either break even or make profits. On August 16, cryptocurrency analyst David Puell said:
“After all, unspent whale groups confirm a great fight. There are two players in the game: the big buyers at 12.14,000 have hit breakeven, and the current buyers have been active in more than a year after the first higher rally. If we get a correction, it will likely be the result. To another large group of regroupings in the 10K range (as expected from the previous volume profile); If we get in, well … enjoy the ride. “”
Hence, it seems reasonable to conclude that today’s moderate correction is due to bitcoin’s sharp rejection in a large area of resistance, some whales’ profit-taking, and a large $ 9,700 CME gap.