After Bitcoin reached $ 11,720 on Binance, traders began to be a bit skeptical of the dominant cryptocurrency. Although initially breaking out above two key resistance levels of $ 11,300 and $ 11,500, BTC has recorded a number of rejections. It may be early to predict a market-wide correction, but the level of uncertainty appears to be rising.
In the short term, traders identify the range of $ 11,200 to $ 11,325 as a critical support zone. If that area holds, technical analysts believe a significant price drop is unlikely. But if Bitcoin weakens below $ 11,300, the market could become vulnerable. While BTC’s technical momentum is down, traders see a larger range of support from $ 10,600 to $ 10,900.
Considering a series of positive events that have driven Bitcoin’s price in recent weeks, the short-term pullback could be good. On October 8, Square announced its purchase of $ 50 million in BTC, reportedly 1% of the company’s assets. Then, on October 13, it was reported that Stone Ridge – a $ 10 billion wealth management firm invested $ 115 million in Bitcoin. Hence, market sentiment is very optimistic and a sell-off to neutralize market sentiment could be positive.
Traders expect a period of consolidation
Traders and technical analysts are currently cautious in the short term, but not falling down enough to predict a clear high. Bitcoin, while hovering under $ 11,500, is up 5% from $ 10,800 so far. Calculated from the monthly peak, BTC has recorded an increase of 8%, relatively high in the short term. Hence, while Bitcoin’s uptrend is down over the past 36 hours, it is difficult to predict a massive pullback.
Trader Michael van de Poppe at the Amsterdam Stock Exchange sees a healthy trend unfolding in the broader cryptocurrency market. He identified BTC could drop to the $ 10,600 to $ 10,900 support range, but the total market cap of the cryptocurrency is clearly pointing up in the direction of the expanding bullish momentum, he added:
Very healthy consolidation is going on here. A higher high is created after a higher low appears. Just another range trading period before a breakout above $ 400 billion. The next target areas are $ 500 and then $ 600. But the uptrend is very healthy ”.
Bitcoin technical analyst Edward Morra cites 3 reasons for a pullback to $ 11,100, noting BTC reaches a critical “daily supply” when it rises to $ 11,700. This means there is considerable liquidity and is also a heavy resistance. Morra also says Fibonacci 0.705 resistance and “weekly pivot point R1” are likely to drop to $ 11,100 in the near term.
“Reach daily supply point + Fib resistance 0.705 + weekly pivot point R1, expect a pullback to ~ $ 11.1k”.
Trader “Bitcoin Jack” who correctly predicted a $ 3,600 bottom in March 2020 believes that while the current trend is not bearish, it is not the best condition to continue. BTC has rejected the $ 11,500 to $ 11,700 range and is trading approximately $ 11,400. He said he could add his positions because the price is more likely to go up.
“Decreased a number but increased again – not too convincing after 2 refusals on the above two price lines. Will be one more time because there is a possibility to continue.
Although traders seem to foresee a small price drop in the short term, many analysts are refraining from their predictions of a full-scale price decline. The cautious stance of most traders could be the result of two factors that have been repeatedly emphasized by analysts since September: a massive 15.5% rally in BTC in just 19 days and resistance. as small as over $ 13,000.
Resistance level is above $ 13,000
Technically, there is no stiff resistance between $ 13,000 and $ 16,500. Since Bitcoin rose in price in December 2017 so fast and strong, it doesn’t leave many levels that could act as a resistance. Hence, if BTC breaks past $ 13,000 and consolidates above, it will increase the probability of a retest (retest) by $ 16,500 and possibly reach a record high of $ 20,000. Whether that will happen in the medium term towards the end of 2021 is still unclear.
Trader Byzantine General says $ 12,000 is a key level. A rapid rise in the price above the $ 12,000 to $ 13,000 range could help BTC reach $ 16,500 and ultimately an all-time high. The analyst said:
Volume profile based on on-chain analysis. $ 12K is an important level. That is the only resistance left. Then the small speed increase at $ 16.5K ”.
The company’s CEO Cathie Wood, which manages more than $ 11 billion of Ark Invest assets, also identified $ 13,000 as the most important technical level for Bitcoin. As previously reported, Wood says that “technically” there is very little resistance between $ 13,000 and $ 20,000. It is not yet clear whether BTC can regain its bullish momentum above $ 13,000 in the short term, leaving traders cautious in the short term but not plummeting prices.
Variables to maintain momentum
Various on-chain indicators and fundamental indices, such as HODLer growth, hash rate, and reserves on Bitcoin exchanges indicate a strong uptrend. On top of that, according to data from Santiment, the developer activity of the Bitcoin blockchain protocol has steadily increased:
“The developer team’s BTC deposit rate on Github soared to an all-time high in October. This is a great sign that Bitcoin’s team continues to strive towards higher performance in the future.”
It is likely that favorable macro factors and bullish fundamentals make up for any short-term technical weaknesses. For alternative assets and stores of value like Bitcoin and gold, negative inflation and interest rates are considered sustainable catalysts. The US Federal Reserve has emphasized a stance on maintaining low interest rates for many years to come to offset the impact of the pandemic on the economy. Recent reports indicate that other central banks may follow suit, including the Bank of England, when Deputy Governor Sam Woods issued a letter asking for public consultation that read:
“We are asking for specific information about your company’s current readiness to deal with zero bank rates, negative bank rates or tiered reserve wage systems and steps. you need to do it to get ready for this. ”
In the medium term, positive on-chain data points and volatile interest rates could further fuel Bitcoin, gold and other safe-haven assets. That could coincide with Bitcoin’s post-halving cycle as it enters 2021, which once sent BTC to new record highs. This time, the market is driven by the entry of institutional investors, as evidenced by the large number of platforms suitable for the institution.