Bitcoin's Bullish Momentum Cools as Stimulus Halts, OKEx Pauses Trading
Bitcoin facing "modest headwinds" on the technical side, as well as a round of bearish news.
Key Takeaways
- Bitcoin has taken a mild dip on the stalled stimulus talks and the sudden news surrounding OKEx exchange.
- A number of CME gaps remain on the charts, indicating further downward pressure to fill discrepancies.
- Still, a pullback all the way back to $11,000 could be an ideal moment for sideline investors to long BTC.
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Bitcoin is facing downside pressure in the near-term, following a stalemate in U.S. stimulus talks. BTC is also struggling to get out from under the unexpected news that the cryptocurrency exchange OKEx has suddenly suspended crypto withdrawals.
Bitcoin Bulls Reach Exhaustion
Looking at the daily, bulls have repeatedly failed to stabilize the daily candle above the $11,500 level. This weighs on BTC in the short-term and thus increases the likelihood of the $11,000 level being tested sooner rather than later.
Technical analysis suggests that a loss of the $10,980 area could cause Bitcoin to suffer a more protracted decline towards the $10,800 area. This is the current location of the cryptocurrency’s 50-day moving average.
The 50-day moving average is often used by traders to gauge the trend’s overall strength and is the leading moving average when combined with the 100-day and 200-day moving averages. Therefore, traders often look to the 50-day as the first line of major support during an uptrend.
Correlating this analysis with the CME futures BTC price action chart, a retracement into the $10,980 area is highly probable since unfilled price gaps from Oct. 9 remain.
While a strong bounce from the $11,000 area seems highly probable at this stage, a loss of the $10,800 support level could put the short-term uptrend into question and could cause traders to turn bearish towards BTC, with sellers then targeting towards the $10,300 to $10,000 technical area.
According to IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP), 2 million addresses have purchased 1.2 million BTC at an average price of $11,457 with a maximum price of $11,663; as such, this has remained a sensitive area for bullish buying pressure.
JP Morgan Chase researchers seemed to have predicted the pullback too, and recently said that BTC is currently overvalued and a short-term retracement is possible.
Another thesis supporting traders buying into price pullbacks is the recent move from large-scale institutions diversifying in Bitcoin. Stone Ridge followed Microstrategy and Square Inc. this week, as the company revealed that they had purchased BTC worth $115 million as part of its treasury reserve strategy.
According to researchers at data firm Glassnode, 14% of BTC supply is currently held in accumulation addresses, which implies a rise in long-term investors holding on to BTC, which may catalyze a bull market. The firm wrote:
“Bitcoin accumulation has been on a constant upwards trend for months. 2.6M $BTC (14% of supply) are currently held in accumulation addresses. Accumulation addresses are defined as addresses that have at least 2 incoming txs and have never spent BTC.”
If Bitcoin’s $11,663 resistance area is surpassed with conviction, a potential price explosion towards $12,700 could occur.
Furthermore, the recent pullback towards the $11,000 support region could create an opportunity for bulls to scale into BTC longs.
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