Bitcoin Sees Immense Volatility in $8,000s as Halving Nears: What Analysts Are Thinking

Since our last market update, Bitcoin has continued to plunge lower.

The leading cryptocurrency just minutes ago tapped $8,180 for the third time in the past two days. BTC has since bounced off that level, indicating that this level is of some importance, rallying back to $8,450 as of the time of this article’s writing.

The initial sell-off from Monday’s highs of $9,200 to $8,500 resulted in $20 million worth of liquidations. This latest leg lower from $8,500 to $8,100 catalyzed another $15 million worth of long positions liquidations on BitMEX, . As to what is causing the ongoing drop, analysts are divided. One trader proposed that it was a “coordinated” sell-off by miners, suggests that this is not the case. Instead, with funding rates crashing through the floor, this could be a concerted attempt by shorts to bring the price lower. Joe McCann, an AI and cloud specialist at Microsoft and a noted crypto trader, commented in his Telegram channel on the drop:

“Lowest [funding rate] print on this flush about half of the previous…fewer longs to liquidate. That’s why I think it could be a short term capitulation bottom.”

Bitcoin Holds Key Levels

Although the drops are not a bullish sign for Bitcoin, it is important to note that the bouts of bearish action over the past two days have all stopped in one key region: $8,000 to $8,200. This is important for bulls, as analysts have explained, because this is the point at which there lie the 100-day and 200-day simple moving averages. These levels are seen as technical inflection points for markets, crypto included.

$8,000-8,200 is also a range at which there is a confluence of historical trendlines and a horizontal resistance, further adding credence to the bullish sentiment.

Analysts Remain Optimistic

Analysts are largely optimistic about Bitcoin moving forward from a short to medium-term perspective, this drop aside.  indicating that there are remarkable similarities between Bitcoin’s price action for all of 2020 and that of the past three days: both periods have a four-phase distribution top, a capitulation crash, then a rapid recovery from the lows.

The fractal playing out in full, the trader suggested, will result in BTC returning to $10,000 in the coming two to three days.

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