Bitcoin (BTC) dropped below $ 13,000 on October 28, shortly after hitting $ 13,850 at its today’s peak. Despite a 7% decline in 11 hours, market sentiment remains positive for three main reasons.
First, Bitcoin is still where it was on October 27, just 24 hours ago. Second, BTC rallied to $ 13,850, below its multi-year resistance zone of $ 13,873. Third, a decline in market levels was expected due to a decrease in stable currency flows to stock exchanges.
Bitcoin returns to where it was yesterday
Over the past two days, the bitcoin price on Coinbase has surged 8.5% from $ 13,783 to $ 13,850. The move came after a month-long uptrend where BTC rose from about $ 10,200 to $ 13,850.
Now, on higher timeframes, such as the daily chart, the BTC price is above the short-term predominantly moving average.
Bitcoin’s recent pattern that follows every trend with a consolidation phase makes the ongoing rally sustainable.
The immediate bargaining power over the derivatives market also indicates that the bullish trend is strong and healthy. A merchant under a pseudonym known as the “Byzantine General” said:
“The higher spot rate and higher spot volume are (relatively) bullish because it means that the gain is based on actual purchases and not a regression to derivatives play.”
The $ 13,873 level is a multi-year resistance zone.
Bitcoin peaked at $ 13,900 in July 2019 compared to major stock exchanges. As Cointelegraph reports, many traders have identified the $ 13,875 level as a key short-term resistance, in part for this reason.
If BTC consistently rises above $ 13,875 without any cuts, it could trigger a significant rally. Over the medium term, this could increase the likelihood of a deep downturn, or as some analysts in this series call it a “hell of a candle.”
The fall in BTC coincided with a lack of stable currency flows.
Ahead of Bitcoin’s short-term correction, CryptoQuant CEO Ki-Yong Joo warned that stable currency flows to stock exchanges are dwindling.
Stabilized currency flow is an accurate indicator of consumer demand as stable currencies like Tether (USDT) account for a significant share of the cryptocurrency market size.
According to CoinMarketCap, the daily volume of Tether on major stock exchanges exceeds $ 59 billion. In terms of net daily volume, Tether is the best-selling cryptocurrency in the global market. Hours before the BTC crash happened, Joe tweeted:
“Fewer people list fixed currencies on stock exchanges. The purchasing power of Bitcoin declines in the short term (72 hours). ”
A decline in stable currency flows could have triggered a sharp drop in bitcoin as buyers and sellers grappled with difficulties last week. Some mining companies and whales were sold, while new earnings continued to offset selling pressure.