The bitcoin price (BTC) has fallen by more than 15 percent in the past three days but traders see a bottom further down below.
Many traders anticipated the bitcoin price to briefly recover to the $9,000 region which has turned into resistance following the steep drop of BTC. Bitcoin is still hovering at $8,400, struggling to rebound to key resistance levels.
According to traders like DonAlt and Josh Rager, the first important support is at $7,350 with a bigger support at $6,500 if the dominant cryptocurrency fails to recover.
On average, based on historical data, the bitcoin price tends to correct by 30 percent amidst extended corrections.
A 30 percent pullback from $10,000, where bitcoin had sidelined for weeks throughout September would result in a further drop to the mid $7,000.
However, Rager noted that a larger drop below $7,000 is a possibility if it is confirmed that the recent pullback of BTC is not a bear trap.
“If Bitcoin fails to break above the current level, we’ll get another retest of the support below – which has bounced once and could hold But if this isn’t a bear trap I do see price heading down to low $7ks Lots of buyer are waiting between $6,180 & $6,500.
IMO, the best and wisest move is to continue to scale in at major support areas While many are now targeting $6,100 to $6,500 as the ‘bottom’ – I can certainly see this level be front-run like every other major target this year Another potential opportunity to get <$8k $BTC.”
As the bitcoin price slipped causing every other major alternative cryptocurrency like Ethereum, Litecoin, and EOS to fall by 15 to 35 percent, investors have flocked to Tether, the most widely utilized stablecoin in the global market.
As of September 26, the daily volume of Tether is hovering at $21.8 billion based on the data provided by CoinMarketCap, higher than the volume of all of the cryptocurrencies in the top 10 apart of bitcoin combined.
The noticeable spike in the daily volume of Tether indicates that investors are hedging their positions in case the BTC pullback reaches for deeper support levels in the near term.
Jake Chervinsky, a general counsel for Compound Finance, said that the U.S. Securities and Exchange Commission (SEC) is likely to continue having concerns about a potential bitcoin exchange-traded fund (ETF) due to the volatility in the market.
“Bitcoin drops 20% over a few days; there’s no simple explanation for why; the drop made big money for offshore unregulated margin trading platforms; trading on those same platforms might’ve caused the drop in the first place; you’re still wondering why the SEC has concerns?”.
The drop has been attributed to a cascade of liquidations on BitMEX and other margin trading platforms that led traders to lose more than $651 million within hours.
For retail investors, however, liquidations on margin trading platforms would be a difficult justification of an abrupt price plunge, which could encourage the SEC to become more cautious towards approving the first bitcoin ETF in the market.
The SEC yet again delayed another bitcoin ETF decision from Wilshire Phoenix this week and in the short to medium term, analysts expect the SEC to avoid approving ETFs around the cryptocurrency market unless the liquidity of the asset increases significantly in the upcoming months, which is unlikely to happen.
Last modified: June 14, 2020 9:39 AM UTC