The price of Bitcoin (BTC) abruptly fell from $11,823 to $11,102 in the last 48 hours. While on a macro level the digital asset remains in an uptrend, there appear to be three key factors behind the pullback.
The presence of a crucial resistance level at $12,000, several whales taking profit, and a retest of a major support area likely catalyzed the drop.
Since the first week of August, Bitcoin has attempted to breach the $11,800 to $12,500 resistance range. Every one of the five attempts to surge past $12,500, $12,000 and $11,800 levels has resulted in steep rejections.
One potential reason the $12,000 level has served as a difficult resistance area for buyers is that it has been a historically relevant resistance area. After February 2018 and July 2019, this is the third time in two years that BTC has tested this resistance zone.
A pseudonymous trader known as “DonAlt” said while Bitcoin could rebound, bears have an easier invalidation than before. He said:
Ever since the price of Bitcoin surpassed $10,000 on July 26, it has remained above the $10,000 to $10,500 support range.
Given that the $10,000 level has become a significant support level for Bitcoin, the possibility of a major support retest exists. On-chain analyst Willy Woo also pointed out that a drop below $10,900 could lead to a CME gap fill, which is present at $9,700.
As Cointelegraph previously reported, a Bitcoin whale who purchased 9,000 BTC in early 2018 recently took profit around the $12K level. At the current price of around $11,300, 9,000 BTC is worth nearly $101.7 million.
Some whales appear to be taking profit because the $11,500 to $12,000 range is where many are either at breakeven or in profit. On Aug. 16 cryptocurrency analyst David Puell said:
“Finally, unspent whale clusters confirm a great battle taking place. Two actors at play: top buyers at 12k-14k reaching their breakeven price, and current buyers active after the first higher high in over a year. If we get a correction, it will most likely result in another major cluster of re-accumulation at the 10k area (as expected from the volume profile before); if we breakout, well… enjoy the ride.”
Therefore, it seems reasonable to conclude that today’s mild correction was the result of Bitcoin’s steep rejection at a key resistance range, some whales taking profit, and the presence of a major CME gap at $9,700.
