After a long period of consolidation, Bitcoin continues its downward movement. And despite expectations of further growth, the collapse is not surprising. Throughout the period of consolidation and floundering in the lower part of the fluctuation range, the coin was subjected to speculative pressure, which ultimately led to its overheating.
The first reason that triggered the fall of bitcoin is a greater influx of coins to exchanges. According to Santiment, more than 10k BTC have been transferred to cryptocurrency platforms over the past week, which equates to $580 million. This is a significant factor that triggered an increase in pressure on the price. This is a clear sign of the sharp decline in price that is happening right now.
With the outflow of institutional investments, Bitcoin has significantly increased its position in the options market, which reflects the desire of speculative investors to play on the rise. A similar situation was observed in mid-August when more than 28k BTC were transferred to the exchanges. As a result, the asset made an impulse decline and reached a local bottom, after which it began a recovery period.
To top it off, it is worth keeping a close eye on the futures market, where demand for cryptocurrency remains at the November highs. This is a clear negative signal because when the price falls, the demand for the future purchase of the coin should go off scale.
The decline in activity in the futures market is also a sign of a decline, as the huge mismatch between the current speculative demand for crypto and the demand for futures indicates that the market is overheated. It is also worth keeping in mind the key rule of the market that the price, in most cases, goes against the expectations of the bulk of investors.
As a result, we see that Bitcoin is trading in the $55k region as of 16:00 UTC and maintains a clearly pronounced downward trend. On the daily timeframe, the impulse decline is very well displayed on the stochastic oscillator: the indicator has formed a wide bearish crossover and continues to decline. The price of BTC is trying to grab the support at $54.6k, where the 0.5 Fibonacci level passes, which serves as a good support zone. However, I anticipate a further decline in the price to the lower end of the $52k - $53.7k range, where a strong buyback should occur.
I would like to believe that the coin will confidently test the $52k - $53.7k area and confidently bounce above $55k. However, comparing the facts, it can be concluded that BTC collapse could provoke a sell-off among retail and large investors. Players who have opened long positions for speculative purposes will disappear on their own, and institutions can aggravate the emerging trend to transfer coins to exchanges. In this case, the price may get close to the support level at $51.5k, where the 0.618 Fibo level passes.
This will be an alarming signal, because according to the wave theory, the price cannot go down to the high of the previous wave. Note that the record of the previous wave is at around $52.8k. If the BTC quotes pass this milestone, the analysis will have to be revised, as there will be a possibility of a medium-term trend reversal downward.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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