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The price of Bitcoin (BTC) fell sharply after approaching $ 18,500 on Binance and Coinbase. The crash took place when large sell orders were identified on both spot and forward exchanges.
As Cointelegraph previously reported, traders expected a pullback as the price of BTC approached the $ 18,000 to $ 19,000 resistance zone. On its first re-test of the area in nearly three years, the market saw a strong reaction.
Bitcoin confirms $ 18,500 as a key area of short-term resistance
There are two main reasons Bitcoin saw a rapid drop near $ 18,500 and this caused an even more difficult correction by other cryptocurrencies such as Ether (ETH).
First, the $ 18,500 level remains the largest resistance level before a new all-time high above $ 20,000. Hence, it is a key area of interest for sellers to defend, as a $ 18,500 breach would increase the chances of a larger rally.
Second, the vast majority of Bitcoin addresses are profitable as BTC tests an important area of resistance. According to IntoTheBlock, 99% of BTC addresses are now in a profitable state. This increases the likelihood of a profit-taking-induced pullback.
Based on the recovery of BTC over the past two hours, there is a high probability that the dips will be bought aggressively. After the initial drop to $ 17,614 on Binance, Bitcoin quickly recovered above $ 17,600.
Bitcoin’s hourly chart shows the 20-day moving average is hovering at $ 17,586. Therefore, if BTC stays comfortably above that level, the likelihood of a sustained recovery increases.
Dan Tapiero, co-founder of 10T Holdings, expressed confidence in Bitcoin’s medium-term prospects. He said the “big boys” or smart money would probably buy the dips. Referring to the Bitcoin weekly chart, he he wrote:
“You don’t often look at a graph like this in life. Bitcoin to cut highs imminently. The third wave until it dwarfs the 2017 move and is expected to persist for several years. Real fundamentals determine price unlike the speccy / ico retail flow of ’17. The big boys will buy the dives now. “
John Wick, a popular Bitcoin trader, echoed this sentiment. Wick said Bitcoin is seeing some profit taking, but it remains uncertain how long the bears would be able to withstand the pressure. He She said:
“The profit-taking has started on BTC right now. Let’s see how far the bears can push this decline before it’s bought back.”
What happens next?
A pseudonymous trader known as “Bitcoin Jack” said the dominant cryptocurrency is reaching the “end” of its short-term cycle. There is still some upside for Bitcoin after the recent pullback, but note that more longs or buyers could be trapped, which could make another dip likely.
The dealer explained:
“We are right in the finale, I think. Some upside left potentially to squeeze the shorter first ones and bait longer to trap. Then clap your hands, the bang makes the trap. We are having shoarma for dinner. “
Considering that Bitcoin’s hourly moving averages have held strong after the decline, the chances of a recovery are greater than a larger decline.
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