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3 reasons Bitcoin price got rejected at $11,500 — and what comes next

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The worth of Bitcoin (BTC) quickly fell after surpassing $11,500 on Binance between Oct. 14 and Oct. 15. Inside two hours, it fell to $11,280, recording a 2.3% drop. After the autumn, analysts predict one other minor pullback within the close to time period.

Three components probably precipitated the rejection to happen embrace a sell-off on BitMEX, a significant resistance degree and the inventory market pullback.

Bitcoin dropped as quickly because the Dow Jones slumped

On Oct. 14, the Dow Jones Industrial Common (DJIA) dropped by 0.58%, after initially seeing a minor upsurge.

Because the pattern of the U.S. inventory market pattern began to shift, Bitcoin recorded a pointy decline. Inside quarter-hour, BTC noticed a 1.15% drop from $11,518 to $11,370.

In accordance with the info from Skew, the correlation between Bitcoin and the S&P 500 has elevated in current weeks. In distinction, the realized correlation between BTC and gold has declined significantly within the final three weeks.

Bitcoin correlation vs. S&P 500, gold, VIX, USD

Bitcoin correlation vs. S&P 500, gold, VIX, USD. Supply: Digital Belongings Information, Cointelegraph Markets

The info means that Bitcoin is presently perceived extra as a risk-on asset over a safe-haven asset. Whether or not that leaves BTC susceptible for a pullback amidst a inventory market downturn within the fourth quarter stays to be seen after a powerful Q3.

BitMEX sell-off

Some on-chain analysts noticed a spike in promoting stress coming from BitMEX, with main market shorts coming via. Earlier than the preliminary drop from $11,540 to $11,280 occurred, many multi-million greenback brief contracts appeared on BitMEX.

Consequently, the open curiosity of BitMEX rose from round $397 million to $414 million, when the worth drop occurred.

The $11,500 degree has turn out to be a resistance space

The repeated rejection from the $11,500 space has turned it right into a technical resistance degree within the brief time period.

Following the battle of BTC to interrupt above $11,500, merchants have began to ponder the opportunity of a drop under $10,900. 

The 3-hour chart of Bitcoin with key support levels

The three-hour chart of Bitcoin with key assist ranges. Supply: Michael van de Poppe

Michael van de Poppe, a full-time dealer on the Amsterdam Inventory Change, stated the $11,300 assist zone stays probably the most essential degree. A drop under it may ship BTC to $10,600, Poppe stated, explaining:

“The view stays the identical. Holding right here and the market would possibly proceed shifting upwards. Shedding this space and I am going to goal $10,900 and $10,600 subsequent.”

Nonetheless, the medium-term prospect of Bitcoin stays optimistic, buoyed by optimistic on-chain indicators. Researchers at Glassnode discovered that 14% of the BTC provide is held in accumulation addresses.

The rising variety of buyers holding onto Bitcoin, probably for a longer-term funding technique, is a major catalyst for BTC heading into 2021. The researchers said:

“Bitcoin accumulation has been on a continuing upwards pattern for months. 2.6M $BTC (14% of provide) are presently held in accumulation addresses. Accumulation addresses are outlined as addresses which have at the least 2 incoming txs and have by no means spent BTC.”

The confluence of repeated rejections from the identical resistance degree depicts a weakening short-term pattern. However within the upcoming months, numerous on-chain information factors recommend the probability of a powerful market restoration.

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