Today, bitcoin's price suffered a significant 6.3% hit. After enjoying a massive rally during the weekend that took bitcoin's price towards a brand new all-time high, at $62,000, BTC/USD is now trading close to $55,800, according to CoinGecko. At its worst point in the day, bitcoin's price had dropped north of 10%, but thankfully it already recovered around 4%.
Even though this drop caught us by surprise, you'll notice how bitcoin's price perfectly rebounded near the predicted bottom (blue range). Although we now think that there's a minor chance the selloff will continue, we assign the highest probability to a swift recovery.
The Volume Profile Visible Range (VPVR) on the left clearly shows massive buying support until $47,000. Therefore, there's still some room for bitcoin's price to drop and still recover within the next few days.
Forbes’s Nina Bambysheva believes,
"The plunge came as a result of an aggressive selloff as 185,350 trades worth approximately $2.22B were liquidated by crypto exchanges in the last 24 hours, mostly in bitcoin".
Therefore, we think this is a minor blip in the road and a terrific opportunity to accumulate more bitcoin or open new long positions. We hope that until the end of the week, bitcoin is back above $60,000.
We remain bullish on BTC/USD as long as:
- BTC/USD remains above its 20-day MMA (red), 50-day MMA (green), and 200-day MMA
(blue). - BTC/USD doesn't drop below $55,000.
- BTC/USD daily volume goes above its 21-day Moving Average soon.
What Do Traders Think?
Today's first tweet comes from Willy Woo, a well-known crypto analyst with over 338,000 followers on Twitter.
In his post, Woo shares the "Bitcoin: Futures Long Liquidation (Total) - All Exchanges" chart, which shows a massive spike in the number of longs being liquidated yesterday.
Woo wrote that
"Markets selling off due to bogus data saying $1b of BTC flowing into Gemini."
Essentially, due to oracles incorrectly guessing bitcoin transfers were external, meaning between a customer and the exchange, it did not account for the fact the bitcoin transfers were internal to the exchange, Gemini.
To conclude, Woo, reshared a post from Glassnode where the company stated that
"the reported transactions were internal. Those are funds that were already on the exchange's wallets and were transferred internally."
Therefore, Woo thinks a false sell signal (large sums of bitcoin being deposited at Gemini) was the culprit behind today's price drop.
The following post comes from Rafael Schultze-Kraft, whose Twitter profile describes him as a data scientist, on-chain analyst, and CTO at Glassnode.
In their post, Schultze-Kraft shares the "Monthly Binary Coin Days Destroyed" chart and explains that it shows
"The number of days per month in which more coin days were destroyed than on average."
According to Glassnode,
"Coin Days Destroyed (CDD) is a measure of economic activity which gives more weight to coins which haven't been spent for a long time."
Schultze-Kraft acknowledges that there has been a significant increase in old coins being sold; however, he also states that "Yes, we are in a bull market."
The following tweet comes from The Moon (TheMoonCarl), a bitcoin investor and trader with more than 196,000 followers on Twitter.
The trader shared a 4-hour bitcoin chart, and he added the “4-hour EXP Ribbon”, that according to Investopedia
“Traders can determine the strength of a trend by looking at the distance between the moving averages, as well as identify key areas of support or resistance by looking at the price to the ribbon. The ribbons can also be used to signal potential trend changes when the price moves through the ribbons, or the ribbons cross each other.”
The Moon also added that
“#Bitcoin is still above the 4-hour EXP Ribbon, indicating that the 4-hour bull trend is intact.”
This is yet another indicator showing bitcoin’s price remains bullish and that buyers are still in control.
We also think that as long as bitcoin’s price finds support above the last ribbon, that is a sign the rally will soon restart.
The last post of the day comes from Bluntz, a cryptocurrency trader with over 112,000 followers on Twitter.
Bluntz shares the 4-hour BTC/USDT chart, and he adds the Fibonacci Retracement indicator showing a potential continuation of bitcoin's price drawback until the $56,000. According to Investopedia,
"In technical analysis, a Fibonacci retracement is created by taking two extreme points (usually a peak and a trough) on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8%, and 100%."
To conclude, the trader believes that after bitcoin reaches the 0.382 Fib level, its price will skyrocket towards $65,000 and potentially above.
We think his analysis is sound and that in case bitcoin's price recovers and goes above $58,000, the chances for a new rally towards $65,000 significantly increase. However, if the opposite happens, we'll start to worry about a trend reversal.
Bitcoin Price Prediction
At the time of this writing, bitcoin's price is trading close to $56,000, after suffering a massive 6% drop in the past 24 hours.
However, most analysts think there is no reason to worry since the issue can be linked to faulty data on bitcoin's transactions that lead to a chain reaction that increased the number of short-term sellers in a matter of hours.
We believe the likelihood that bitcoin's price will quickly recover and go back above $60,000, in a matter of days is quite high. As we wrote in yesterday's Daily Roundup, $52,000 is a critical support level for bitcoin's price, which means that while BTC/USD holds above this crucial level, there is no strong reason to think the trend has shifted and is now bearish.
How do we think the price will trade today? As shown in the above chart, we believe that bitcoin could reach its prior high of around $62,000 in the next few days, as long as buyers continue to enter the space.
On the other hand, we don't expect the cryptocurrency to drop much below $52,000. If it fails and does not hold above $50,000, a massive drop towards $42,000 could still be in play.
To finalize, the VPVR shows a high number of buy orders between $50,000 and $55,000 and that there are almost no sellers left above the current price, at around $60,000, which means BTC/USD should soon break a new high and continue into price discovery mode.
Don't over-expose yourself to volatility, and remember that bitcoin's price generally suffers sharp swings during bull-runs.