Home Coins Bitcoin (BTC) 3 reasons Bitcoin suddenly dropped 3% in 1 hour and recovered

3 reasons Bitcoin suddenly dropped 3% in 1 hour and recovered

- Advertisement -

Three factors likely triggered a quick decline in the price of Bitcoin (BTC) on Oct. 25. First, traders pinpoint the $13,300 to $13,500 area as a major resistance range. Second, futures and options markets are neutralizing. Third, weekend trading is seemingly amplifying volatility.

The $13,300-$13,500 range is a key resistance area for Bitcoin in the short term

Before the sudden price drop occurred, BTC soared from $13,127 to $13,350. The dominant cryptocurrency rallied swiftly to an area of interest for sellers as more miners moved BTC to exchanges.

Throughout the past week, data from ByteTree shows Bitcoin miners have been selling more than they mine.

BTC possibly saw a sharp correction as it surged to a key resistance range, which sellers aggressively defended.

Some technical analysts anticipated the price of Bitcoin to rise to around $13,500 before seeing a pullback. Before the volatile price action occurred, cryptocurrency trader Cantering Clark said:

Upside borrowing/leveraged long exposure will be more prevalent the further up this goes, but right now futures are consistently extended from spot and the friction is obvious. Maybe get one more pop up 13.5-13.8 before a nice sized pullback.”

2-hour price chart of Bitcoin with key support levels. Source: TradingView, Michael van de Poppe

Futures and options markets are neutralizing

After the week-long rally, the futures market started to show signs of overheating. Although the funding rate of BTC remained at an average 0.01% level, alternative cryptocurrencies demonstrated high funding rates.

The overall cryptocurrency futures market needed pullback to reset or cool down the funding rates of top cryptocurrencies. The Bitcoin Fear and Greed Index is also showing “extreme greed” in the market, which makes a healthy pullback a positive trend for BTC.

Bitcoin Fear & Greed Index. Source: Alternative.me

Weekend trading typically spurs volatility

Meanwhile, the options market also faces expiration worth $750 million in about six days that could trigger volatility.

During the weekend, particularly on a Sunday, the volatility of Bitcoin and the cryptocurrency market tends to increase.

There are many potential factors that could cause volatile price movements to occur. Two main factors are lower the volume during the weekend and the anticipation of the Sunday weekly candle close.

If the price of Bitcoin stays over $12,000 in the next 15 hours, it would mark the first weekly candle close above $12,000 since January 2018.

Weekly price chart of Bitcoin. Source: TradingView.com

As such, while BTC continues to see high volatility, the optimism surrounding its high time frame log charts are buoying the general market sentiment.

One popular technical analyst known as “Squeeze” emphasized that the macro view of Bitcoin remains optimistic, particularly as exchange BTC balances continue to drop reducing available supply. He said:

“Bitcoin’s macro view remains bullish as the Exchange $BTC Balances continue to decline sharply since March (whales are not yet selling. Even at $13,000.) There’s also around 136k BTC currently locked in WBTC/RenBTC.”



First published here

- Advertisement -
Mr Bitcointe
Mr Bitcointehttps://www.bitcointe.com/
“Fact You Need To Know About Cryptocurrency - The first Bitcoin purchase was for pizza.” ― Mohsin Jameel
472FansLike
76FollowersFollow
4,567FollowersFollow
5,261FollowersFollow
1,559FollowersFollow
2,230SubscribersSubscribe
USD - United States Dollar
EUR
1.21
GBP
1.34
CHF
1.12
NOK
0.11
JPY
0.01
CAD
0.77
AUD
0.74

Most Popular

US Bill Would Require Stablecoin Issuers to Get Bank Charters

A new U.S. Congressional bill would require stablecoin issuers to secure bank charters and secure regulatory approval prior to circulating any stablecoins.U.S. Representatives...

BANANO Monthly Update #32 (December 2020) | by Banano | Banano | Dec, 2020

In what was a quick turn-around in application and implementation, BANANO is now on the Sweden-based exchange Altilly with BTC and ETH pairs.Full...
bitcoin
Bitcoin (BTC) $ 19,196.91
ethereum
Ethereum (ETH) $ 596.23
ripple
XRP (XRP) $ 0.628818
tether
Tether (USDT) $ 1.00
bitcoin-cash
Bitcoin Cash (BCH) $ 294.79
bitcoin-cash-sv
Bitcoin SV (BSV) $ 171.32
litecoin
Litecoin (LTC) $ 88.74
eos
EOS (EOS) $ 3.07
binancecoin
Binance Coin (BNB) $ 30.32
okb
OKB (OKB) $ 5.37
tezos
Tezos (XTZ) $ 2.40
leo-token
LEO Token (LEO) $ 1.36
cardano
Cardano (ADA) $ 0.159870
monero
Monero (XMR) $ 128.19
stellar
Stellar (XLM) $ 0.184992
chainlink
Chainlink (LINK) $ 13.93
huobi-token
Huobi Token (HT) $ 4.00
tron
TRON (TRX) $ 0.031250
usd-coin
USD Coin (USDC) $ 0.999557
dash
Dash (DASH) $ 106.32
neo
NEO (NEO) $ 18.09
iota
IOTA (MIOTA) $ 0.347804
nem
NEM (XEM) $ 0.200603
zcash
Zcash (ZEC) $ 76.35
maker
Maker (MKR) $ 562.07
paxos-standard
Paxos Standard (PAX) $ 0.999666
ethereum-classic
Ethereum Classic (ETC) $ 6.27
vechain
VeChain (VET) $ 0.016464
true-usd
TrueUSD (TUSD) $ 0.998091
ftx-token
FTX Token (FTT) $ 4.50
kucoin-shares
KuCoin Shares (KCS) $ 0.834016
waves
Waves (WAVES) $ 7.02