On September 3, the price of Bitcoin (BTC), the S&P 500 index and gold fell simultaneously. Following the collapse, sentiment in the markets remains cautiously negative.
Two factors are likely to have triggered the sharp decline of Bitcoin by more than 8% during the day yesterday. First, miners sold unusually large quantities of BTC in a short period of time. Second, the U.S. dollar index has started to recover from a key support zone, valid for several years.
Analysts also attribute the loss of gold to the growth of the US dollar. The warning of the European Central Bank about the rise of the euro has made investors more cautious about the fiat currency. The change in the level of confidence further helped the dollar, contributing to the contraction of the gold.
The decline marked by the S&P 500 could have been a coincidence, as it followed a strong sale by large technology companies.
What is the next move for the price of Bitcoin?
After the severe correction, the market climate for Bitcoin remains confused. Some investors say that BTC will probably remain stable above $10,500 and will see a bullish continuation.
Others hint at the possibility of a maximum in the medium term, considering the pullback intensity in a crucial area. An alias trader known as „DonAlt“ explained:
„There is a strong possibility that we are marking a medium term high here. If the price recovers to $11,500 by the weekend, I will consider the idea null and void, but until then I think this structure would form a splendid maximum“.
The sharp drop of Bitcoin from $12,000 to less than $10,500 shows that the area between $12,000 and $12,500 is a strong resistance range, while BTC is likely to form a head and shoulders pattern over longer ranges.
Technically, the drop of Bitcoin Era from $11,462 to $10,460 over 24 hours increases the chances of a further pullback, as the asset has cancelled 31 days of earnings with a single daily candle.
In a comment to Cointelegraph, eToro crypto analyst Simon Peters explained that the bullish market structure is still intact. Therefore, until BTC falls below $10,000, technical factors suggest that a strong correction is unlikely:
„The $11,300 level, which has been valid for the entire month of August, has now broken down, and Bitcoin could fall quite a bit more. We can expect another $10,000 test as a new low point, which could also coincide with the 200-day exponential moving average (EMA).
From a technical point of view, this scenario could reinforce the price action and prevent the price from falling further“.
The last months have marked the longest period in which Bitcoin has been above $10,000 since 2017. Another variable that could prevent a further decline is the buyers on the sidelines ready to enter the market close to $10,000.