Three factors probably caused the rapid fall in Bitcoin (BTC) prices on October 25. First, traders have identified the $ 13,300 to $ 13,500 range as the main resistance area. Second, the futures and options markets have been neutralized. Third, weekend trading appears to be increasing volatility.
The $ 13,300-13,500 range is the main area for short-term resistance for Bitcoin.
Before the sudden drop in prices, BTC rose from $ 13,127 to $ 13,350. The dominant cryptocurrency quickly aroused the interest of sellers when several miners switched BTC to stock exchanges.
Over the past week, data from ByteTree has shown that Bitcoin miners sell more than they sell.
BTC has probably undergone a sharp correction when it entered a large area of resistance which the sellers strongly defended.
Some technical analysts expected the bitcoin price to rise to around $ 13,500 before falling. Before the volatile price movement occurred, cryptocurrency trader Canning Clark said:
Bullish loans / long-term exposure to leverage will be more common the higher this rally, but at the moment futures are constantly expanding out of position and friction is evident. You may have a new opportunity to jump 13.5-13.8 in front of a good pullback size. ”
Bitcoin price chart for 2 hours with key support levels. Source: TradingView, Michael van de Poppe
The futures and options markets are neutral
After a weekly rally, the futures market is starting to show signs of overheating. Although the BTC funding ratio remained at an average of 0.01%, alternative cryptocurrencies showed high funding rates.
The futures market for cryptocurrencies has generally had to roll back to dump or lower the financing rates for the best cryptocurrencies. Bitcoin Fear and Greed are showing extreme greed in the market, making a healthy withdrawal a positive trend for BTC.
Weekend shopping is usually unstable
Meanwhile, the options market is also facing a $ 750 million expiration in about six days, which could lead to volatility.
During the weekend, especially Sunday, the Bitcoin and cryptocurrency markets tend to increase volatility.
There are many potential factors that can cause price fluctuations. The two main factors are the decline in volume over the weekend and the expectation that the weekly light closes on Sunday.
If the Bitcoin price stays above $ 12,000 over the next 15 hours, it will be the first weekly light to be close to $ 12,000 since January 2018.
So while BTC continues to show high volatility, the optimism associated with record charts with higher time frames increases the general market sentiment.
A well-known technical analyst known as “Squeeze” has confirmed that the overall outlook for Bitcoin remains bullish, especially as BTC stocks continue to decline, shrinking the available offer. He said:
“The total supply of bitcoins remains optimistic as the balance between the US dollar and BTC has continued to plummet since March (whales are not for sale yet. Even to $ 13,000). Also around 136,000 BTC are currently closed on WBTC / RenBTC.