Bitcoin (BTC) price has fluctuated a lot in the past 24 hours. After the Dow Jones Industrial Average rose sharply by more than 800 points, BTC collapsed along with gold. In the five hours after hitting a four-day high of $ 15,840, the dominant cryptocurrency fell 6.5%. After the BTC corrected, analysts and traders continue to exchange opinions about their near-term prospects.

Bitcoin’s short-term withdrawal, which happened within hours, was apt for BTC for three main reasons. First, it neutralized the derivatives market, which was no longer overheating. Second, it led to a healthy rejection of the $ 16,000 resistance level. Third, it showed that even after a marked drop in prices, the total demand of the consumers remains unchanged.

Pfizer vaccine neutralizes the market
On November 9, Bitcoin dropped from $ 15,840 to $ 14,805, shortly after Pfizer announced its positive experiences of COVID-19 drugs, with nearly 44,000 people testing and 90% efficacy. Since the announcement of Pfizer, the major US stock market indices have risen nearly 3%.

The long-awaited breakthrough in vaccine development led to a sharp decline in Bitcoin and gold. Capital flew for a short period from safe assets and storing value into at risk assets, such as stocks. As a result, gold showed an intraday decline of 4.5%, which is rare for an asset of this size. This sparked interest in stocks and other risky assets, giving Bitcoin whales a reason to sell.

As Bitcoin began to decline, the flow of whales to cryptocurrency exchanges began to increase. This means that the wealthy investors who sold large quantities of BTC. Since Bitcoin reached more than $ 15,300 in six hours, it is possible that the whales bought it back at a lower price. Depending on the trend, it’s possible that the whales used the description of the pollen-induced correction to sell on resistance and buy at a lower price.

Speaking to Cointelegraph, Bitcoin Technical Analyst Eric Tees said that Bitcoin essentially fluctuates between two levels: support at $ 14,500 and resistance at $ 16,000. Bitcoin jumped a lot as it approached $ 16,000, indicating large sell orders in the $ 16,000 resistance range. Tees noted that if BTC noticed any consolidation under $ 16,000, it would be beneficial for buyers:

“We’ve seen Bitcoin skip past its previous opponents in 2019 for about two weeks, and with sharp price fluctuations between $ 14.5000 and $ 16000, the bulls need a consolidation period before we quickly accelerate to a 2017 high of $ 19,500.” …
Bitcoin’s short-lived decline was also crucial to restarting the futures market. Before the fall, the funding ratio for bitcoin futures on major stock exchanges was well above the average of 0.01%. This means that the vast majority of market participants either yearn or buy bitcoins. After the correction, the funding ratio is back to 0.01%, indicating that the futures market is no longer overheated.

What the internet data points say
The long-term outlook for Bitcoin remains positive, according to Ki Young Joo, CEO of CryptoQuant. Key told Cointelegraph that the average flow of money into the stock market shows that the bitcoin market is “still in strong buying territory”. Exchange receipts show the amount of BTC that traders and investors transfer to exchanges. When this number remains low, it usually indicates a decrease in selling pressure on the exchanges.

However, Key said that after the fall of Bitcoin, there was an influx of Bitcoin from whales. Although this appears to be a downtrend, the analyst indicated that whales tend to sell bitcoin regularly during uptrends. Since whales seek liquidity, they choose to sell when the price rises to ensure there is sufficient buy-in in the market. Although the trend could be down, depending on perception, Key said that market sentiment is unlikely to reverse at this time:

“After the price fell, there was an influx of whales into the stock market for two reasons. The first in the beef market: to sell it at the local maximum price. They sell when private investors are active in the exchanges. Second, in the bear market the market: sell it if there is fear Unusual selling… I would say that we are in Case No. 1. We still have room for individual investors to be active on exchanges.
Big declines expected during new record bull races
Analysts and traders generally take a similar stance in large downturns during bitcoin’s bullish trends which are normal. Tees explained that he expects Bitcoin to reach a new full-time high of $ 2021 in January 2021 or February 2021. However, Tees emphasized that major downturns have always occurred during previous bullish cycles. Even during the 2017 rally, when BTC came close to $ 20,000, BTC fell 20-30% multiple times in the short term.

According to Tees, if Bitcoin continues to consolidate at a decent rate, then buyers are immune to a significant downturn.

Source: CoinTelegraph