The price of bitcoin (BTC) fell sharply as it approached $ 18,500 on Binance and Coinbase. The sinking occurred as large sales orders were spotted on both spot and futures exchanges.
As Cointelegraph reported earlier, traders expected a retreat as the price of BTC approached the resistance zone of $ 18,000 to $ 19,000. In the first re-test of the area in nearly three years, the market saw a strong reaction.
Bitcoin confirms $ 18.5k as a key area for short-term resistance
There are two main reasons why Bitcoin has seen a rapid decline of close to $ 1
First, the $ 18,500 level remains the highest resistance level before a new record above $ 20,000 of all time. This is therefore a key area of interest to protect sellers, as violating $ 18,500 would increase the chances of a wider rally.
Second, the vast majority of Bitcoin addresses are profitable, as BTC tests an important area of resistance. According to IntoTheBlock, 99% of BTC addresses are now in a state of profit. This increases the likelihood of a withdrawal caused by making a profit.
Drops are likely to be purchased aggressively, based on the BTC recovery over the past two hours. After Binance’s initial decline to $ 17,214, Bitcoin immediately recovered to over $ 17,600.
The Bitcoin hourly chart shows that the 20-day moving average (MA) is moving at $ 17,586. As such, if the BTC remains comfortable above that level, the likelihood of a prolonged recovery increases.
Dan Tapiero, co-founder of 10T Holdings, expressed confidence in Bitcoin’s medium-term outlook. He said the “big boys” or smart money would probably buy the downs. Referring to Bitcoin’s weekly chart, he writes:
“Often in life you can’t look at a chart like this. #Bitcoin to cross the tops immediately. 3rd wave until the move of 2017 and should last several years. True basic driving prices as opposed to ’17 specs / ico retail flow. The big boys will buy downs now. “
John Wick, a popular bitcoin trader, repeated this feeling. Wick said bitcoin has some profit, but it remains uncertain how long the bears will be able to maintain the pressure. He said:
“Profiting started in $ BTC right now. Let’s see how far bears can push this failure before buying back. “
What happens next?
A trader under the pseudonym known as “Bitcoin Jack” said the dominant cryptocurrency was reaching the “end” of its short cycle. It remains a bit up for Bitcoin after the recent withdrawal. But he notes that more stocks or buyers may be trapped, which could lead to another drop.
The trader explained:
“I think we are in the final. Some ups are potentially left to squeeze the shorter ones and lure more to catch more. Then clap, the blast goes into the trap. We’re having dinner. “
Given that Bitcoin’s hourly MAs remain strong after the decline, the chances of a recovery are higher than a larger decline.