In the past hour, the price of Bitcoin has erased most of its daily gains. At the time of writing, the price stands at $34,650. BTC had reached the $36,000 mark, starting November with a new yearly high. This opened the door to new highs for many cryptocurrencies. So, what caused the drop in the past hour?
After reaching the $36,000 mark, the king of cryptocurrencies retreated back to the $34,500 zone. While we are familiar with such correction movements after resistance tests, the acceleration of profit-taking sales could lead to the end of the uptrend. However, for now, we are far from the worst-case scenario for BTC.
Michael Poppe shared the following chart on his social media account when the drop began, discussing the current situation.
“Bitcoin price made a rally, but it couldn’t sustain its strength.
– Buyers are decreasing.
– Profit is being made from long positions.
In general, I don’t see too many problems. Maybe we will retest $33,500. Or we will take a long dive, but this seems relatively normal.”
If the analyst’s concerns prove to be true, the test of $33,500 for the BTC price could indicate whether the rally that started in October will continue or not.
There hasn’t been a significant development that triggered the recent decline. On the macro front, tomorrow’s data will provide an updated view of the US economy. Apart from that, the statements of the Fed Chairman were relatively moderate. While emphasizing that the possibility of interest rate hikes is not completely off the table, Powell admitted that they are progressing (albeit slowly) in the direction they desire.
On the other hand, we need to remember the reason for the rally. The cryptocurrency rally supported by increased institutional demand due to the approval of the Spot Bitcoin ETF will end when this sentiment reverses. Has there been any development that could negatively affect the approval of the ETF? No, in fact, the ETF files continue to be updated, indicating ongoing communication with the SEC.
Therefore, it wouldn’t be wrong for investors to see the ongoing movement as nothing more than a pullback after resistance tests for now. If the price starts to close below $34,500, this could bring about the correction at $33,500, which Poppe highlighted, followed by a further acceleration of selling pressure, potentially testing the $32,000 and $31,200 regions.