Data from the Bitcoin network suggests potential sell-off of $16,000

9.12.2020 | 16:42

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The technical framework and the chain data for the price of Bitcoin (BTC) strongly favour a short-term downward jump to $16,000

The price of Bitcoin is expected to rise after falling below $18,000 after a strong settlement. The decline to lows of $17,640 followed another $1000 decline on Tuesday.

While bulls remain in control with prices above $18,200 at the time of writing, the bearish price action in the next few sessions will likely see bears try a new test of the $16,000 area. The negative outlook for a bullish Bitcoin market follows the increase in profit taking since the BTC price soared to a new all-time high (ATH).

The data shows that most of the downward pressure comes from long-term holders selling for book profit.

The Santiment analyst firm revealed that almost $280 million in Bitcoin was transferred to exchanges shortly before the recent liquidation. According to the company, the proceeds are responsible for the largest transfer of this kind to the exchanges in more than a month.

The percentage of the Bitcoin offer that moved to the exchanges before liquidation was the highest in 5 weeks. Source: Santiment

The Santiment observation also supports what was Bitcoin Supreme seen of another indicator in the chain, called Coin Days Destroyed (CDD). The metric tracks the movement of older currencies and shows that the number of long-term holders selling their assets has increased significantly.

Glassnode notes from the weekly BTC perspective that an increase in the CDD is likely to lead to extended side trading, or may suggest a sharp correction in the short term, before prices recover to a new ATH.

As noted earlier, Bitcoin may fall to $16,000 or less if bears remove the bracket in the $18,000-$17,000 mid-low range.

The initial anchor on the downside is in the 50-day simple moving average at $16,326. Below that, bears can keep an eye on the $15,300 level, with a likely new test of $14,000.

But the recovery from collapse to $17,640 to highs of $18,300 suggests that buyers continue to wait for bullish stock.

On the 4-hour chart, the BTC price is looking to rise above $18,000 after hitting 200-SMA ($17,572). If the bulls can sustain the upward trajectory, the next target is the 50-SMA area ($19,046), with a move to $19,500 likely to clarify if the low was at the recent low.

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