3 Reasons Bitcoin’s Price Suddenly Dropping Below $ 13,000 Isn’t Bearish

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The price of Bitcoin (BTC) fell below $ 13,000 on October 28, shortly after hitting $ 13,850 at the day’s high. Despite the 7% drop in 11 hours, market sentiment remains positive for three main reasons.First, Bitcoin is still where it was on October 27, just 24 hours ago. Second, BTC fell to $ 13,850, just below a multi-year resistance zone at $ 13,873. Third, a market decline was expected due to the decline in stable currency inflows into the stock exchanges.

Bitcoin falls to where it was yesterday

Over the past two days, the price of Bitcoin has risen 8.5% from $ 13,783 to $ 13,850 on Coinbase. The move came after a month-long uptrend in which BTC rose from around $ 10,200 to $ 13,850.

Now, on high-maturity charts, like the daily chart, for example, the BTC price hovers above a key short-term moving average.

Bitcoin’s recent pattern of following every uptrend with a phase of consolidation makes the ongoing rally sustainable.

The daily Bitcoin price chart with funding rates. Source: TradingView.com

The strength of the spot market in the derivatives market also indicates that the uptrend is strong and healthy. A pseudonymous trader known as the “Byzantine General” he told me:

“A higher spot price and higher spot volume (relatively speaking) is considered bullish because it means the rally is based on actual buying instead of escalating by playing derivatives.

The $ 13,873 level is a zone of multi-year resistance

Bitcoin peaked at around $ 13,900 in July 2019 on major exchanges. As Cointelegraph reported, many traders identified the $ 13,875 level as the short-term pivotal resistance zone in part for this reason.

If BTC had continuously risen beyond $ 13,875 without any pullback, it would have caused the rally to overheat massively. In the medium term, this would have increased the likelihood of a deep pullback, or as some chain analysts call it, a “hell candle”.

The BTC drop coincided with the lack of stable coin entries

Ahead of Bitcoin’s short-term correction, CryptoQuant CEO Ki-Young Ju warned that inflows of stable currencies into exchanges were declining.

The influx of stablecoins is an accurate metric to gauge buyer demand, as stablecoins, like Tether, make up a large portion of the cryptocurrency market volume.

Stablecoin entries in the exchanges fall sharply. Source: CryptoQuant

According to CoinMarketCap, Tether’s daily volume exceeds $ 59 billion on major exchanges. In terms of daily volume, Tether is the most traded cryptocurrency in the global market. Hours before the BTC crashed, Ju tweeted:

“Fewer people are depositing #stablecoins on exchanges. The purchasing power of BTC weakens in the short term (72h). “

The drop in stable currency inflows may have triggered a sharp pullback in Bitcoin as buyers and sellers were fighting intensely over the past week. Some miners and whales were selling, while new entries continually offset the selling pressure.



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