28 Aug 2020 #Bitcoin
As Bitcoin price corrects, traders debate whether BTC will visit $9.6K or $16K first. The price of Bitcoin (BTC) has declined by more than 6% in the last three days and with the $276 million CME Bitcoin futures expiry approaching on Aug. 28, traders are nervous that additional downside could be in store.
Following Bitcoin’s rejection at $12,500, traders foresee two key scenarios playing out over the short term.
Some technical analysts believe that Bitcoin is headed to either $16,000 or $9,600 first but the near-term outcome remains uncertain as it’s dependent on certain resistance and support levels being hit.
According to the pseudonymous trader Byzantine General, Bitcoin (BTC) could rise to either $16,000 or drop to $9,600.
If BTC’s weekly chart closes above $11,500, the trader said the chances of BTC rallying to $16,000 increase. If the price remains below $10,500, the trader said $9,600 is the logical support. He wrote:
“Let's keep it simple. 11500 key level. If weekly close above --> 16k. If close below --> 10.5 ‘obvious support.’ Cuz obvious 10.5 might do nothing like 6k in '19. 9600 is the next strong support (CME).”
Another compelling reason traders might expect a brief pullback to the $9,600 to $9,700 area is due to a CME gap. These gaps form on the CME Bitcoin futures market’s chart because the regulated market closes during the weekend.
A CME gap typically is closed within a short period of time, and this raises the chances of a pullback. There is also a small CME gap at $16,000, but only on a lower time frame chart where the gap has existed for years.
In the short term, another cryptocurrency analyst called Mayne said that Bitcoin bulls would need to reclaim $11,700. Failure to reclaim this higher resistance level could result in an extended consolidation phase. The analyst noted:
“Here is what you don't want to see as a bull, price with a false break high and now stair stepping down. Last 2 up moves seem like clear bearish retests. If this is distribution, expect the selling to pick up speed soon. Bulls need to come in and regain $11.7.”
Earlier today the price of Bitcoin briefly rose to as high as $11,600 following the Federal Reserve chair Jerome Powell’s speech on inflation. During the build-up to the speech many investors expected gold and Bitcoin to benefit from Powell’s speech about controlling the inflation rate.
But shortly after the speech finished the BTC price immediately declined from $11,600, dropping to as low as $11,125 on Coinbase. As Cointelegraph reported, it could have been the confluence of the market pricing in the Jackson Hole symposium and the lower-than-expected inflation rate.
Whether the altering of this trend will sway BTC into the bearish scenario of a revisit to the $9,600 to $10,500 price range remains to be seen.
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