After approaching $18,500 on Coinbase and Binance, Bitcoin then sharply dipped. An analyst shared some reasons for this crash. Moreover, the top analysts predicted institutional investors will buy the dip.
Bitcoin’s price dropped intensely after nearing $18,500 on Coinbase and Binance. The downtrend happened when huge sell orders were transacted on both futures and spot exchanges.
As previously reported, as the price of BTC approached the $18,000 to $19,000 resistance zone, traders were expecting a pullback. The market witnessed a firm reaction upon its initial retest of the area in nearly three years.
Bitcoin confirms $18,500 as a key near-term resistance area
There exist two principal reasons why BTC encountered a fast drop near $18,500. As a result, other cryptocurrencies like ETH corrected even harder.
The first reason is that before a fresh all-time high above $20,000, the $18,500 level stays the largest resistance level. Therefore, as breaching $18,500 would give chances of a bigger rally, it is definitely a key area of interest for sellers to defend.
The second one is that a big part of Bitcoin addresses are profitable because BTC tests are a significant resistance area. IntoTheBlock reported that 99 percent of BTC addresses are currently in a state of profit. This increases the chance of a profit-taking-induced pullback.
A co-founder of 10T Holdings, Dan Tapiero, expressed his sentiments in Bitcoin’s medium-term outlook. He stated:
What happens next?
“Bitcoin Jack”, a pseudonymous trader, said that the dominant cryptocurrency is nearing the final part of its short-term cycle. However, he said that it could trap more buyers of longs. It could then make another drop possible.
The trader explained that the chances of recovery are higher than a larger drop considering that the hourly moving averages of Bitcoin held firmly after the crash.