Bitcoin fell on Friday, continuing its plunge further into the week as traders secured their short-term profits.
The flagship cryptocurrency fell more than 4 percent to $16,734 in the early London session. Its plunge appeared as a part of an overall downside retracement that started at the local top near $19,500 this Wednesday. The downside move itself followed a supersonic price rally that saw the BTC/USD exchange rate rising by more than 90 percent in six weeks of trading.
Bitcoin looked overbought after the bull run. As a result, its rally exhausted, causing traders to pull out their long positions to book their gains. Meanwhile, the absence of higher bid matches ended up lowering the ask calls, leading to a 16.92 percent price correction as of this Thursday.
Ki-Young Ju, the chief executive of data analytics platform CryptoQuant, highlighted a sudden increase in the Bitcoin deposits across all the crypto exchanges. Most of these deposits originated from the wallets held by “whales,” a slang term for entities that hold larger amounts of Bitcoin.
“I expect dumping in the short-run,” Mr. Ju added. “All Exchanges Inflow Mean(144-block MA) hit 2 BTC. I think we’re in a danger zone. The price is likely to go sideways or down when whales are active on exchanges.”
Bitcoin to ~$14,000
Bitcoin’s short-term charts spelled a similar bearish outlook. The four-hour timeframe showed the cryptocurrency breaking out of an Ascending Channel range to the downside. It is a sign of a bearish reversal, also as Bitcoin’s latest attempt to waiver its losses met with strong resistance at local highs.
The question remains about how the far short-term bearish trend would go. Veteran trader Peter Brandt says the sellers could stretch the downside bias by as much as 37 percent from its yearly top near $19,500. That would mean a fall towards $14,230, a level with a history of acting as resistance in January 2018 and May 2019.
“The interesting thing about the psychology of market speculation is this — many traders who swore they would [turn] buyers of a big dip when [the] price was above $19,000 will actually become sellers under $15k,” he added.
Meanwhile, Mr. Brandt also said that Bitcoin had not topped yet. It means that the cryptocurrency would very likely resume its uptrend after its pullback, heading towards a record high.