3 Reasons Bitcoin Price Rejected $ 11,500 Level, And What’s Next
The price of Bitcoin rejected the $ 11,500 level in a rapid price drop coupled with rising shorts on BitMEX and falling US stocks. The price of Bitcoin (BTC) fell rapidly after surpassing $ 11,500 on Binance between October 14-15. In two hours, it fell to $ 11,280, registering a 2.3% drop. After the slide, analysts are expecting another small short-term pullback.
Three factors that likely caused the crash: BitMEX selling, a major resistance level, and the stock market crash.
Bitcoin fell as soon as the Dow Jones crashed
On October 14, the Dow Jones Industrial Average (DJIA) was down 0.58%, after initially seeing a small increase. As the trend of the US stock market began to change, Bitcoin saw a sharp decline. In 15 minutes, BTC posted a 1.15% drop from $ 11,518 to $ 11,370.
According to Skew data, the correlation between Bitcoin and the S&P 500 has increased in recent weeks. In contrast, the correlation made between BTC and gold has declined considerably in the last three weeks. The data suggests that Bitcoin is currently perceived more as a risk asset than a safe-haven asset. Whether this leaves BTC vulnerable to a pullback amid a stock market crash in the fourth quarter remains to be seen after a strong third quarter.
Some on-chain analysts spotted a spike in selling pressure coming from BitMEX, with major market shorts looming. Before the initial drop from $ 11,540 to $ 11,280 occurred, many multi-million dollar short contracts appeared on BitMEX.
Consequently, BitMEX’s open interest rose from around $ 397 million to $ 414 million, when the price drop occurred.
The $ 11,500 level has turned into a resistance level.
The repeated rejection of the $ 11,500 zone has made it a short-term technical resistance level. After BTC’s struggle to break above $ 11,500, traders have started to consider the possibility of a drop below $ 10,900.
Michael van de Poppe, a full-time trader at the Amsterdam Exchange, said that the support zone at $ 11,300 remains the most critical level. A dip below it could send BTC to $ 10,600, Poppe said, explaining: “The view remains the same. If it stays here, the market could keep moving higher. If it loses this zone, it will target $ 10,900 and $ 10,600 next time. “
Even so, the medium-term outlook for Bitcoin remains positive, driven by bullish on-chain indicators. Glassnode researchers found that 14% of the BTC supply is held in accumulation directions. The growing number of investors clinging to Bitcoin, likely for a long-term investment strategy, is a significant catalyst for BTC to head into 2021. The researchers said:
“The accumulation of Bitcoin has been on a constant upward trend for months. $ 2.6 million of BTC (14% of supply) is currently held in accumulation directions. These are defined as addresses that have at least 2 incoming txs and that have never spent BTC. “
The confluence of repeated rejections of the same resistance level shows a weakening trend in the short term. But in the coming months, several chain data points suggest the likelihood of a strong market recovery.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.