Bitcoin Risks 20% Drop after Rejecting $10,500 Top; Here’s Why

Bitcoin is gawking at extended losses only hours after it established a new yearly high at $10,500.

The benchmark cryptocurrency on Thursday plunged by 3.86 percent to circa $10,094, according to US exchange Coinbase. The crash took bitcoin’s spot rate down by more than $400 within just three hours, showing fresh signs of buyers’ exhaustion in an otherwise booming market.

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BTC/USD eyeing a deeper correction below $10K | Source: TradingView.com, Coinbase

Nevertheless, bitcoin’s move downhill located moderate support above $10,000.

The cryptocurrency later managed to register an upside pullback, raising hopes for a retest of the $10,500 top. But the volumes appeared weaker enough to attempt a wild jump, putting bitcoin under the risks of continuing its plunge, now towards the $9,800-9,900 range (the pinked trendline support).

A $2,000 Bitcoin Crash

The overall BTC/USD trend remained bullish, with prices still up by circa 43 percent on a year-to-date timeframe. At the same time, the cryptocurrency continued trending above key long-term support areas, such as the 200-daily and 50-weekly moving average. The only indicator that signaled a selling sentiment was an overbought Relative Strength Indicator (or RSI).

But repeated failures of sustaining a rally above $10,000 kept bitcoin’s bearish targets in view. Analysts including Sunny Decree pointed out that traders are looking for a deep retracement towards $8,500.

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CME BTC/USD Futures left a gap near $8,500 | Source: TradingView.com, Coinbase

The Youtuber noted that CME futures linked to bitcoin have left a small gap near $8,540. 96 out of 100 times, the crypto’s spot rate tends to visit the unfilled gaps on its futures charts, to fill them. The historic reference prompted Mr. Decree to say that BTC/USD could crash by up to 20 percent from its $10,500-top.

“There is no fundamental reason that a gap has to get closed,” he explained. “But Bitcoin is very volatile and there is a probability that it’s going to reach the [CME gap] again.”

Just a Pullback

Not all followed bearish predictions for bitcoin, with some noting that bitcoin’s latest plunge could be nothing but a pullback to neutralize its overbought levels. Market expert Michaël van de Poppe, for instance, said bitcoin could retest $9,500-9,800 in the coming sessions but there is nothing alarming about that.

“Does this mean: bear market? No,” tweeted Mr. Poppe. “Thinking retests of $9,500/$9,800 would be healthy if we get it.”

The analyst added that bitcoin’s dip, in the meantime, would give opportunities for altcoin traders.

“I expect altcoins to bounce back very strong, the moment Bitcoin calms down. It’s their playground this quarter,” he concluded.

The last bitcoin pullback had taken its price down by more than 10 percent.

     
 
 




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