- Bitcoin whales likely seeking liquidity as the price dives towards $8,000.
- Bitcoin must keep above the Moving Averages and $8,000 to encourage fresh demand and a refocus on $9,000.
Bitcoin has taken most people in the cryptocurrency world by surprise following the unexpected move on Friday. The digital asset initially broke out in an impressive move easily smashing through the barriers at $8,600 and $8,800. However, the fireworks did not last, the bulls found themselves in a devastating bull trap. Bitcoin chopped off gains erasing most of the progress made in the last two days. According to a crypto trader, Scott Melker:
“I don’t think whales stopped hunting. I just think they started hunting for liquidity to sell and short, and the $8800 area was a predictable area to do so. Pushing price up to engineer liquidity was a logistical move.”
The tentative support at $8,400 did little to cushion the drop as Bitcoin shifted focus from $9,000 to $8,000. Meanwhile, it is trading at $9,315 above the Moving Averages (MAs). The 50 MA on the four-hour chart has crossed above the 100 MA further cementing the bearish pressure in the market.
BTC/USD 4-hour chart
The high volume and high volatility levels reduce the chance of a reversal in the near-term. Besides, the Relative Strength Index (RSI) is below the average (50) and even pointing south to show that sellers have the influence. As it stands, Bitcoin is not oversold and there is a chance that lower correction could refresh lows around $8,000.
Whether this correction was going to create demand for Bitcoin in the near-term, is’s something that will be seen with over time. However, a good gesture would be to stay above the 50 MA and the 100 MA. Also staying above $8,00 will allow Bitcoin buyers to focus on higher levels.
BTC Key Technical Levels
Support $8,200, $8,000 and $7,800
Resistance: $8,400, $8,800 and $9,000.
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