A few Bitcoin traders expect now expect a deeper correction but data suggests that a relief rally toward $18,000 should not be ruled out.
The price of Bitcoin (BTC) has been consolidating above $17,000 on Nov. 28 following a major correction from $19,400. In the near term, traders anticipate the dominant cryptocurrency to see another steep pullback.
There are three main reasons why traders expect a deeper drop to occur in the near future, namely, historical cycles, the Fibonacci Sequence, and the record-high open interest of the futures market.
Historical cycles hint at deeper BTC correction
BTC price frequently saw 20% to 30% drops in past bull markets like the rally to nearly $20,000 in 2017. Although the rally continued afterward, major corrections occurred as the derivatives market became overcrowded.
Several traders now say that the price of Bitcoin should correct to the $13,800-$14,500 range if a similar pattern occurs.
In addition, some technical analysts are considering a worst-case scenario where BTC falls to the top of the August 2020 rally. That would put the price of Bitcoin at around $12,468.
Crypto Twitter is going to hate me for this…
I have strong conviction we'll see $13k-ish. pic.twitter.com/6g3sFzbVnt
— Altcoin Psycho (@AltcoinPsycho) November 27, 2020
A pseudonymous trader known as “Salsa Tekila” said that the technical outlook of Bitcoin is relatively straightforward.
If BTC rises above $17,500 and stays above it, the trend becomes bullish once again. But, if BTC stays below $17,500, a drop to the $11,000 to $13,000 range should not be unexpected. The trader wrote:
“My $BTC outlook: 1) Bearish below $17’500 area. 2) Bullish if we break $17’500, in which case buy dips. 3) $18.7k area = only big resistance before ATH (IF, MAYBE). Could see [$11-$13k]. Wouldn’t hold net short past ≈$14.5k.”
The Fibonacci sequence
As Cointelegraph previously reported, traders are pinpointing the 0.618 level using the Fibonacci sequence as a potential area of interest for buyers.
The Fibonacci sequence encompassing Bitcoin’s entire rally until $19,400 puts the 0.618 level at around $13,500. Under the sequence, 0.618 is considered a pivotal level for a potential trend reversal.
The futures market’s open interest remains high
When the open interest of the Bitcoin futures market remains above $1 billion, the price of BTC tends to drop.
Earlier today, Cointelegraph reported that throughout BTC’s history, its price often corrected when the futures market saw a heightened level of trading activity.
According to data from Skew, the open interest across major futures exchanges currently exceeds $1 billion. OKEx, Binance Futures, and CME, the three largest BTC futures markets, have now reached an all-time high open interest of $1.4 billion, $0.94 billion, and $0.93 billion, respectively.
Bullish counterarguments
Other traders, however, believe that Bitcoin could either rally to $18,000 before any pullback or even see a continuation of the general uptrend to new highs.
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said earlier today that the range low for BTC price is currently holding, which is above $16,000.
This may result in a relief rally to $18,000. Whale clusters also show that the $16,000 area remains a strong support level.
Send it to 18k. pic.twitter.com/vsRtaFfDew
— il Capo Of Crypto (@CryptoCapo_) November 28, 2020
Similarly, a pseudonymous trader known as “Crypto Capo” said that based on previous fractals, BTC could first see $18,000 before another major drop.
Source: , CoinTelegraph
Articles listed with Cash Tech News as the author are either general information, or may have been imported from another website, to bring our readers a rich media experience that encompasses articles that we find interesting, as well as those curated by others.
The views and opinions expressed here are for informational purposes only, and should not be confused with professional financial advice. These opinions are solely those of the author and do not necessarily reflect the views of CashTechNews.com. Every investment and trade involves risk. You should conduct your own research, and contact your professional financial advisor before making any investment.
Corrections, feedback, and ideas should be submitted through the website contact form.