Bitcoin’s price suddenly dropped over 5% today in just three hours. Analysts generally attribute this volatility to an overheated derivatives market and the new weekly candle ahead.
Why some technical analysts expected this move
Some traders and technical analysts had anticipated the Bitcoin retreat – largely due to the range it has seen over the past few days.
Bitcoin Superstar has consolidated between $ 38,800 and $ 41,000 in the past 72 hours. Given that we are in the weekend and the volume is low all around, the likelihood of BTC declining and testing the bottom of the range was anyway high.
Crypto trader Scott Melker expected Bitcoin to test „the lows“ of the range, which he did. BTC fell a little lower than $ 38,800, which surprised many traders.
Some traders placed a bid in the range of $ 39,300 support with a stop just under $ 38,800. But BTC pulled back more than most expected – which resulted in many stops being triggered.
In the short term, traders generally remain cautious and uncertain about the price development of BTC. On January 11th, Bitcoin sees a new weekly candle, which is usually accompanied by a surge in volatility.
Edward Morra, a crypto trader, believes that many stops have been cleared and that liquidity is at range high. That means BTC is likely to rise towards the high of the range at $ 41,000. Morra on this:
„Stops deleted, now we have some liquidity at the range high, but there is 1 bearish possibility that I spotted.“
There are two short-term scenarios. First, Bitcoin could retest and pull back from the high in the $ 41,100 area.
Second, Bitcoin ( Go to Buy Bitcoins with PayPal Instructions) could rise again to $ 41,100 and break out this time as BTC historically tends to break out on the third retest.
But some traders have recognized the emergence of celebrity tweets – and they had also provided indications in previous bull cycles that Bitcoin could soon be peaking.
A pseudonymous trader named „Loma“ believes that it doesn’t necessarily indicate that Bitcoin is bearish or bullish . But it could be used as a way to measure market sentiment. Loma on this :
“It’s not necessarily bullish or bearish on tech. I don’t expect the tmrw price to crash because Katy Perry has crypto nails or KSI tweeted about $ ETH. I just like using them as a measure of where we are on the cycle. I’m sure it brings in a lot of new buyers and attention, but I always wonder: Well, if we get a damn ton of exposure from celebrities, institutions buying / buying, traders are most likely there. That sounds like a lot of buyers who have already bought. „