- $38 billion drained from the crypto market due to its volatility in the past 2 weeks
- Despite resistance from Bitcoin bulls price fell to $11,200 from $12,000
- Bitcoin would still remain bullish as long as it stays above 10k
The cryptocurrency market has been volatile for the past two days resulting in a drain of $38 billion from crypto markets. Bitcoin prices succumbed to a staggering 10% which caused major losses for Ethereum, XRP, BCH, LTC, and so on.
The reason behind the shocking sell-off wasn’t immediately apparent, even though one of the reasons has pointed to the correlation with traditional markets. After hitting a new record high earlier this week, the S&P 500 Index of large U.S. stocks reversed on Thursday, following which, the bitcoin prices also saw a sharp decline. Another popular belief behind bitcoin’s recent pull-back was the recent clampdown of Korea’s largest cryptocurrency exchange, Bithumb. After hitting the $12,000 mark, Bitcoin’s price corrected back to $11,300 levels; the plunge, which was also observed following a report of Korean police charging Bithumb for fraud.
Bitcoin Price Action
Bitcoin bulls observed testing it’s support level above $11,150 multiple times over the last week, as of recent bitcoin touched the resistance at $12,000. The month of August saw bitcoin bulls struggle to break above $12,000, but red flags were observed every time, and continued till now as well, as the latest red alert observed on the charts on 1st September.
The resistance of $12,000 has proved to be fatal, considering whenever bitcoin has tested the $12000 level, it has been pulled down below $11,200 or even down. The recent surge in bitcoin price arrived with doubts of a bull trap. As a result, bitcoin plummeted significantly by $680 within just 24 hours. This bull trap may trigger the depletion of buying pressure in the short-term, which will make it challenging to construct a quick recovery on the charts.
Bitcoin Miners Sell-off
Bitcoin miners chose to trade their bitcoin holding, which they earned to maintain the blockchain network’s security. The blockchain-data analysis firm, CryptoQuant, highlighted that they had observed an increase in bitcoin outflow purportedly to exchanges for a possible sale. Also, per the data provided by ByteTree, bitcoin miners are selling their holdings much faster than they produced this week. The net outflow of bitcoin recorded 812 BTC over the week. However, the figures for this week’s outflows from miners roughly match that of last week. It significantly increased selling on the miners’ part compared to mid-August when the weekly outflows stood at 171 BTC.
BTC Technical Analysis
On the 4-hour chart, Bitcoin (BTC) entered oversold level, Here we should see a relief rally soon. If bulls take control from here bitcoin should bounce back and test 11120 usd area.
The Relative Strength Index or RSI saw that the asset was lying in the oversold territory at 24 points. The volume profile (green) shows good interest around 9200-10000.
Bitcoin could still drop from this level or after a retest of the pennant. In the coming days, more sell off can be expected unless bulls take control and push the price to close inside the pennant.
The recent movement of bitcoin appears to be following a Wyckoff phase. Bitcoin would still remain bullish as long as it stays above 10k.
Looking at the current bitcoin market it appears that we should be entering a disbelief phase of the market cycle.