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The price of Bitcoin (BTC) has seen volatility in the past 12 hours. The leading cryptocurrency dropped from $ 16,400 to $ 15,750 in just a few hours, abruptly declining after breaking through the $ 16,000 resistance earlier this week.
As of November 14, Bitcoin’s 20-day moving average on the daily chart is $ 14,600. In the short term, if a pullback occurs, the $ 14.6K level remains a favorable area for buyers.
An algorithmic trader known as “CryptoGainz” explained that Bitcoin’s current market structure likely caused a sell-off. The trader spotted the abundance of sell orders at $ 16.5K which did not decrease when BTC hit $ 16,400.
This could indicate that the sell orders at that level are not spoofed orders. Hence, it could show that sellers are indeed attempting to take profit on BTC at around $ 16,500.
Why $ 16.5K is a problem for Bitcoin in the short term
When traders or bots try to fake the Bitcoin market, they place fake orders at key support or resistance levels.
For example, if traders place large fake orders near a resistance level, there is a chance that buyers will not push through the resistance. Therefore, spoofing could be used to artificially pump or limit the momentum of a market.
“Ask” or sell orders above $ 16,500 did not disappear during the recent BTC rally. With this in mind, the likelihood of $ 16.5K acting as a strong resistance level in the short term remains high.
When BTC was hovering around $ 16,200 before Bitcoin’s price drop occurred, the pseudonymous trader explained:
“I wouldn’t say we’re going to bomb, but at this point smart proprietary entities with a lot of capital and intellectual property of some nature realize that the 16.5k claims have been there for a long time and they don’t seem to increase with the price. very close to there “.
The trader noted that the algorithms could switch to “chasing” long contract stops if it is profitable to do so. Based on BTC’s rapid decline over a short period, this is likely to have happened when BTC dipped below $ 15,800. The trader added:
“It means that if there is an algorithm that can profitably offload the price and offload the longs, the conditions for its use could be designed to extract the maximum profit. tl; dr – as soon as it is profitable to hunt longs, your stops are taken. “
Where the BTC price could go next
The outlook for Bitcoin between traders and analysts remains mixed. Some traders claim that a deep fall in the $ 12,000 to $ 13,000 range is inevitable, if not healthy, during this bull run.
Cantering Clark, a Bitcoin trader, said a new $ 13,000 test could occur despite BTC’s strong momentum. He he wrote:
“I like to raise my voice to everyone else when the stuff is pumping, but I’m securing the bag and playing short-term just now. Feeling like we are hot, I think the market inflicts the most pain on the downside rather than the upside. Spot players don’t have an easy ride. “
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