3 reasons why traders now expect Bitcoin to hit $ 13K before a new rally

November 28, 2020 Coin Payment

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The price of Bitcoin (BTC) consolidated above $ 17,000 on November 28 following a major correction from $ 19,400. In the short term, traders expect the dominant cryptocurrency to see another steep decline.

There are three main reasons why traders expect a deeper decline in the near future, namely historical cycles, the Fibonacci sequence and the record interest of the futures market.

BTC / USDT 4-hour chart (Binance). Source: TradingView.com

Historical cycles suggest a deeper BTC correction

The price of BTC has often seen drops from 20% to 30% in past bull markets as it rallies to nearly $ 20,000 in 2017. Although the rally continued thereafter, major corrections occurred as the derivatives market became overcrowded.

Several traders now claim that Bitcoin’s price should correct in the $ 13,800- $ 14,500 range if a similar pattern occurs.

Additionally, some technical analysts are considering the worst-case scenario where BTC falls at the top of the August 2020 rally. This would put the price of Bitcoin at around $ 12,468.

A pseudonymous trader known as “Salsa Tekila” claimed that Bitcoin’s technical prospects are relatively straightforward.

If BTC rises above $ 17,500 and stays above, the trend turns bullish again. But, if BTC stays below $ 17,500, a drop in the $ 11,000 to $ 13,000 range shouldn’t be unexpected. The dealer he wrote:

“My outlook in $ BTC: 1) Bearish below the $ 17,500 area. 2) Bullish if we exceed $ 17,500, in which case we buy declines. 3) $ 18.7k area = only great resistance before ATH (IF, MAYBE). I could see [$11-$13k]. It would not hold net worth beyond ≈ $ 14.5k. “

The Fibonacci sequence

As Cointelegraph previously reported, traders are identifying the 0.618 level using the Fibonacci sequence as a potential area of ​​interest for buyers.

The Fibonacci sequence which encompasses the entire Bitcoin rally up to $ 19,400 puts the 0.618 level at around $ 13,500. According to the sequence, 0.618 is considered a fundamental level for a potential turnaround.

The open interest of the futures market remains high

When the open interest of the Bitcoin futures market remains above a billion dollars, the price of BTC tends to fall.

Earlier today, Cointelegraph reported that throughout BTC’s history, its price often corrected itself as the futures market saw an increase in the level of trading activity.

According to Skew data, open interest on major futures exchanges currently exceeds $ 1 billion. OKEx, Binance Futures and CME, the three largest futures markets on BTC, have now achieved an all-time high open interest of $ 1.4 billion, $ 0.94 billion and $ 0.93 billion respectively.

Open interest in the bitcoin futures market. Source: Skew

Bullish counter-arguments

Other traders, however, believe that Bitcoin could hit $ 18,000 before any pullback or even see a continuation of the general uptrend towards new highs.

Michael van de Poppe, full time trader on the Amsterdam Stock Exchange, She said today that the low end of BTC’s price is currently maintained, which is above $ 16,000.

This could result in a relief rally to $ 18,000. The whale clusters also show that the $ 16,000 area remains a strong level of support.

Similarly, a pseudonymous trader known as “Crypto Boss” claimed that based on previous fractals, BTC may first see $ 18,000 before another major drop.