The price of Bitcoin has started its correction below USD 17,000, resuming yesterday’s bearish downtrend. Traders have mixed reactions to BTC’s weakening short term momentum.
Some traders believe that BTC could drop to $ 16,000 or possibly as low as $ 13,800. The likelihood of a decline to the USD 13,000 region remains low, but that level is the previous peak of the June 2019 rally.
The hourly price chart of Bitcoin. Source: BTCUSD on TradingView.com
$ 13,800, $ 16,000 and $ 16,200: Bitcoin Levels Traders Watch
Traders are getting cautious in the short term due to the trend that Bitcoin saw overnight. On November 26, overextended longs were liquidated en masse in the futures market.
This caused shock waves across the market, causing Bitcoin and other major cryptocurrencies, including Ethereum, to collapse.
A merchant known as “Cred” wrote:
“Bunch of leveraged longs were crushed overnight, as evidenced by the drastic reduction in outstanding interest. Levels aren’t great here, but I’m willing to dip buy at the weekly structure / to last week’s low ie below $ 16k. If it isn’t, I’ll take $ 13.8k. “
A Bitcoin price drop was necessary to neutralize the derivatives market. BTC’s funding rates before the correction were at unsustainable levels.
Despite Bitcoin’s technical strength, the rally reached a point where it was more compelling to sell BTC short. There was also significant liquidity in the USD 16,000 region, making it quite a support area.
In the short term, traders expect Bitcoin to undergo either a greater decline or weakened momentum. An abrupt trend reversal has become less likely due to the sharp drop in open interest rates in the futures market.
As such, the USD 13,800 level is a less likely lower support level, with USD 15,000, USD 16,000 and USD 16,200 as immediate support levels in the middle.
What would a bullish trend reversal confirm?
Traders say it is reclaiming the resistance range of USD 17,500 to USD 17,700 oneid the recovery of BTC in the near future.
A trader known as “Salsa Tekila” said:
“I have the green light to buy $ BTC dips if we go above 17.5k again.”
But technically, if BTC hits the resistance range and declines again, there is still a possibility for a bearish continuation, at least in the short term.