3 main reasons why traders believe Bitcoin price will retest the $ 6,500 bottom

    Bitcoin is likely to drop to 7k5

    The price of Bitcoin (BTC) has plummeted by about 18% in the past two weeks and traders are concerned about a further correction going on in the short term. Here are 3 main reasons for the above view.

    Reason 1: Technical structure of Bitcoin

    As of the end of February, technical analysts still expect Bitcoin price to remain stable on support of $ 9,550.

    This support is an important area to hold because it is a Fibo level of 0.615 and also a sensitive level that could turn into resistance soon thereafter.

    Bitcoin's fall below this threshold, after testing three times, has liquidated hundreds of millions of dollars of long contracts on the margin market.

    When BItcoin breaks the inverted head and shoulders structure, analyst Pentarhudi thinks that the $ 6,000 to $ 6,500 zone could be the next target.

    Scenario for Bitcoin price to drop to $ 6,000 (source: Pentarhudi Tradingview)
    Scenario for Bitcoin price to drop to $ 6,000 (source: Pentarhudi Tradingview)

    Reason 2: Funding and open interest index

    For a long time, the funding interest of Bitcoin and Ethereum has remained above 0.1% on BitMEX, Binance Futures as well as many other derivative platforms.

    The funding rate of non-term swap contracts (a type of futures but not futures contracts) has increased significantly as more long contracts have been established in the market. When there are more short commands than long, this funnding rate will in turn have a negative value.

    A positive value indicates that, every 8 hours, investors who choose long will have to pay for the position they are holding, and the opposite of the negative value of the short order.

    Analysts say the index's imbalance with cryptocurrencies is more severe than what happened in October 2018. In December 2018, the Bitcoin price plummeted to $ 3,150 amid gloom. of a bear market.

    Reason 3: The foundation for a breakout

    The rally from $ 8,000 to $ 10,500 is believed to be driven by a number of fake buy orders.

    This move has been banned in the stock market and has been used to counteract demand for Bitcoin because of the FOMO mentality of many players.

    When the Bitcoin price rises sharply in the short-term frame, it becomes extremely sensitive to deep corrections. When the market rallies thanks to the aforementioned fake orders, a return is possible.

    Analyst Jacob Canfield said $ 8,000 to $ 8,400 might be two hard supports for Bitcoin in the short term:

    "$ 8,000 will not be broken in the first test. $ 8,400 is the second hard support level as the selling force cools to near this level. "

    However, according to Adaptive Capital's Nik Yaremchuk, the large amount of pending buy orders at the $ 7,500 threshold could cause Bitcoin to plunge to this price range.

    At the moment, Bitcoin is slightly down 0.1% over the 24 hour range. Bitcoin's market capitalization is currently at $ 157.45 billion with 24-hour trading volume of $ 35.74 billion.

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    According to Coin68 / CryptoSlate
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