Within less than three weeks, since July 9, the bitcoin price has fallen from over $13,000 to below $10,000, which many investors regard as a key psychological level for the crypto asset.
While the dominant crypto asset initiated a strong recovery on July 17 from around $9,200 to $10,600, it has struggled to climb above $11,000, failing to test the resistance level throughout the past several days.
Largely technical movement, positive fundamental developments for bitcoin
As said by technical analysts like Josh Rager, apart from a few short squeezes on margin trading platforms including BitMEX and BitFinex, the price movement of bitcoin in the past two weeks has mostly been driven by technical factors.
When bitcoin was hovering at around $10,300, Rager emphasized that if the asset fails to claim $10,189 as a support level, a drop down to 4 digits is imminent.
“Breaking down to support zone. On 1HR chart showing top of support zone now acting as resistance. Not a great sign for bulls and want to see price break back up in neutral territory Continue to watch this area for a break $10,189 will lead back down to 4-digit BTC,” he said.
Earlier this week, prior to the pullback of bitcoin from $10,300, another crypto asset trader said that the gap in CME’s bitcoin futures contract can be found at $8,500, indicating that if the asset falls to four digits, there exists a possibility that it dips to a lower region than expected.
Since mid-July, bitcoin has shown the materialization of several short squeezes, one of which led to a nine percent rally within a few minutes that ultimately led to the liquidation of most short contracts on margin trading platforms.
Apart from some short squeezes, the market, for the most part, has shown signs of control by bears with immense sell pressure.
DonAlt, a cryptocurrency trader and technical analyst, said that the next support for bitcoin can be found at $9,800, indicating that a drop to four digits is likely at the current juncture of the market.
“If I had to pick two places to close shorts///long it would be the two green areas below. S1: $9800; S2: $8200. Anything else is in no shape or form significant enough to me to buy in a (short-term) bear trend,” he said.
Technical indicators have shown a weak hand for bulls but fundamental factors like the emergence of new trading venues have generally led to a boost in sentiment around the crypto market.
On July 22, Bakkt, a bitcoin futures trading platform created by ICE, the parent company of the New York Stock Exchange, officially announced the opening of its testing platform.
The crypto market has had high anticipation for the launch of Bakkt due to its bitcoin-settled contracts as opposed to cash-settled contracts at other venues such as CME.
“Today kicks off user acceptance testing ICE for the Bakkt Bitcoin Daily & Monthly Futures contracts Testing is proceeding as planned with participants from around the world,” said Bakkt.
Despite strong fundamental factors, bitcoin has shown weak short term trend as of recent, which some analysts have indicated that the sell pressure in the market may be too strong for fundamental factors to turn around.
In the near term, analysts expect large volatility in the bitcoin market, opening the possibility of short squeezes.
Click here for a real-time bitcoin price chart.
Last modified: March 4, 2021 2:38 PM