3 reasons Bitcoin suddenly dropped 3% in 1 hour and recovered – Cointelegraph

Posted: October 31, 2020 at 11:53 am

Three factors likely triggered a quick decline in the price of Bitcoin (BTC) on Oct. 25. First, traders pinpoint the $13,300 to $13,500 area as a major resistance range. Second, futures and options markets are neutralizing. Third, weekend trading is seemingly amplifying volatility.

Before the sudden price drop occurred, BTC soared from $13,127 to $13,350. The dominant cryptocurrency rallied swiftly to an area of interest for sellersas more miners moved BTC to exchanges.

Throughout the past week, data from ByteTree shows Bitcoin miners have been selling more than they mine.

BTC possibly saw a sharp correction as it surged to a key resistance range, which sellers aggressively defended.

Some technical analysts anticipated the price of Bitcoin to rise to around $13,500 before seeing a pullback. Before the volatile price action occurred, cryptocurrency trader Cantering Clark said:

After the week-long rally, the futures market started to show signs of overheating. Although the funding rate of BTC remained at an average 0.01% level, alternative cryptocurrencies demonstrated high funding rates.

The overall cryptocurrency futures market needed pullback to reset or cool down the funding rates of top cryptocurrencies. The Bitcoin Fear and Greed Index is also showing "extreme greed" in the market, which makes a healthy pullback a positive trend for BTC.

Meanwhile, the options market also faces expiration worth $750 million in about six days that could trigger volatility.

During the weekend, particularly on a Sunday, the volatility of Bitcoin and the cryptocurrency market tends to increase.

There are many potential factors that could cause volatile price movements to occur. Two main factors are lower the volume during the weekend and the anticipation of the Sunday weekly candle close.

If the price of Bitcoin stays over $12,000 in the next 15 hours, it would mark the first weekly candle close above $12,000 since January 2018.

As such, while BTC continues to see high volatility, the optimism surrounding its high time frame log charts are buoying the general market sentiment.

One popular technical analyst known as "Squeeze" emphasized that the macro view of Bitcoin remains optimistic, particularly as exchange BTC balances continue to drop reducing available supply. He said:

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3 reasons Bitcoin suddenly dropped 3% in 1 hour and recovered - Cointelegraph

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