Bitcoin’s 20% drop in over 2 days has proved once again that BTC is a highly volatile asset and that anything can happen in a few days or hours. This drop caused liquidations worth approximately $700 million on BitMEX. While the price seems to have subsided, things might not appear as they seem to be.
Hourly and Daily Chart
The sudden drop in Bitcoin’s price could be easily attributed to its volatility; the 30-day volatility for BTC hit bottom on 16 September, which is usually followed by periods of high volatility. Additionally, the fact that Bitcoin was consolidating for over 4 months and was primed for a breakout, best explains the recent drop in Bitcoin’s price.
The price of Bitcoin is stuck in a consolidation pattern which will eventually breakout to the bottom from the looks of it, as the pattern seems wildly similar to the one seen right above it. The drop from the current pattern could result in BTC heading to as low as $7,700 or hitting a roadblock at $7,850.
The daily chart for Bitcoin paints a bleak picture, mainly due to two reasons,
- The price has closed below the 200-daily moving average which is extremely bearish for Bitcoin.
- The 50-daily moving average is not far behind, as it is also closing in for a death cross.
The chances of Bitcoin falling further down becomes more concrete once the 0.5-fib level is breached, along with subsequent closes below the 200-DMA. If the scenario ever plays out, Bitcoin might head to $6,580 or even find a support midway at $7,300 – $7,400.
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