The price of Bitcoin (BTC) fell below $13,000 on October 28 shortly after peaking at $13,850 in a day. Despite a 7% drop in 11 hours, the market sentiment remains optimistic for three key reasons.
First, just 24 hours ago, Bitcoin was still in its October 27th state. Second, BTC rose to $13,850, slightly below the multi-year resistance level of $13,873. Third, due to the decrease in the inflow of stable coins into exchanges, the entire market is expected to fall.
Bitcoin fell to yesterday’s levels
In the past two days, the price of Bitcoin on Coinbase rose from $13,783 to $13,850, an increase of 8.5%. The move was carried out after a month of uptrend, during which BTC rose from approximately $1
Now, on high time frame charts, such as the daily chart, the BTC price is hovering above the key short-term moving average.
The recent Bitcoin model follows each uptrend during the consolidation phase, allowing the sustained rebound to continue.
The strength of the spot market relative to the derivatives market also indicates a strong and healthy upward trend. A pseudonymous businessman named “General Byzantium” said:
“Higher spot prices and higher spot volumes (relatively speaking) are considered bullish, because it means that the rise is based on actual buying, not based on derivative gambling.”
The $13,873 level is a multi-year resistance area
Bitcoin on various major exchanges peaked at approximately $13,900 in July 2019. As reported by Cointelegraph, many traders identified the $13,875 level as a key resistance area in the short term.
If BTC continues to rise more than $13,875 without any correction, it will cause the rally to become overheated. In the medium term, this will increase the possibility of a deep correction, or as some chain analysts call it, a “hell candle.”
The decline in BTC coincides with the lack of stablecoin inflows
Before Bitcoin’s short-term correction, CryptoQuant CEO Ki-Young Ju warned that the number of stablecoins flowing into exchanges is decreasing.
The inflow of stablecoins is an accurate indicator of buyer demand, because stablecoins (such as Tether) account for a large part of the total cryptocurrency market.
According to data from CoinMarketCap, Tether’s daily trading volume on major exchanges exceeds $59 billion. From the perspective of daily transaction volume, Tether is the largest cryptocurrency in the global market. A few hours before the BTC drop occurred, Ju tweeted:
“Fewer and fewer people deposit #stablecoins on exchanges. The purchasing power of BTC is waning in the short term (72 hours).”
The decrease in stablecoin inflows may have triggered a sharp fall in Bitcoin, as buyers and sellers have been fiercely competing over the past week. Some miners and whales are selling, and new inflows continue to offset sales pressure.