2020-11-14 19:34 |
The price of Bitcoin (BTC) declined to $16,000 across major exchanges after hitting $16,480 on November 14. Although the BTC price recorded a near 3% drop within 24 hours, the retest is healthy for the ongoing rally.
The 15-minuteprice chart of Bitcoin. Source: BTCUSD on TradingView.com Reasons Why the Drop to $16k Could Actually Benefit BitcoinThe retest of the $16,000 level benefits Bitcoin for three main reasons as numerous on-chain data points, such as stablecoin inflows, make a larger rally more likely.
First, if BTC rebounds in the near term following its minor drop to $16,000, it would confirm the $16,000 area as a support level. Even during the parabolic uptrend in 2017, when the BTC price hit $20,000, the dominant cryptocurrency struggled to establish $16,000 as a support level. This was because the rally occurred so quickly and there was no consolidation above the area.
Second, whales or high-net-worth individuals have continuously sold throughout the past several days. Since there is heightened selling pressure in the market, minor drops are healthy for the BTC price rally to be sustained.
Third, the pullback would further neutralize the derivatives market, including both futures and options contracts. Before the drop, the funding rate of BTC futures was at around 0.01%, which is an average rate. After the drop, the funding rate would neutralize even further, which would make the ongoing rally less overcrowded.
BTC Price Now in “Safe Zone” After Whales Complete Selling CycleKi Young Ju, the CEO of CryptoQuant, an on-chain market analysis firm, reported on November 12 that whales were selling Bitcoin. At the time, Ju said:
“We might have some $BTC corrections here as the exchange whale ratio(24h MA) hits over 85%, but I think it won’t be a mass-dumping.”
Since then, whale inflows into exchanges have subsided and stabilized. This means that whales have started to sell less Bitcoin, applying lower selling pressure on the market.
“We got back to the safe zone. The $BTC correction was smaller than I expected. Obviously, the bull market will continue till this Exchange Whale Ratio will range between 85-90%,” Ju said on November 13.
Since there are fewer large sellers in the market, especially if Bitcoin starts to recover from its $16,000 support retest, the upside momentum of BTC price could amplify once again.
There are also an abundance of positive fundamental factors that could catalyze Bitcoin over the long run. For instance, the Federal Reserve said it would maintain its average inflation policy until 2024.
“The Federal Reserve is expecting to keep interest rates in the 0.00–0.25% range … until 2024. As inflation is positive, that translates into negative real short-term rates, leading to currency debasement for the foreseeable future,” economist Alex Krüger wrote.
Atop the optimistic fundamental and technical factors buoying the BTC price, favorable macro factors would also fuel Bitcoin as it enters 2021.
Similar to Notcoin - TapSwap on Solana Airdrops In 2024
ETH/LINK Price Action Candlestick Set (LINKETHPA) на Currencies.ru
|
