The $16K zone will be crucial.
It's now 10 days since Bitcoin broke its All-Time High (ATH), close to $20K. While many thought that the $20K barrier would then be quickly broken, the Bitcoin price has been rejected several times by the $20K.
The $20K is becoming more of a psychological barrier than ever.
Since then, many in the Bitcoin world believe that a healthy correction is inevitable for December 2020. After a bull rally as strong as the one Bitcoin has just experienced, its price usually experiences a significant correction of 20-30%.
At the time of writing, the Bitcoin price has just plunged to $17.5K:
The Bitcoin price has dropped 11% since its new ATH.
The big question now is how far the Bitcoin price can fall in the coming days.
The first thing that seems obvious now is that Bitcoin miners seem to think that the bull rally reached its peak on December 1, 2020.
This metric is used to track the ratio of BTC leaving the wallets of Bitcoin miners. The fact that Bitcoin's MPI reaches a three-year high clearly shows that miners are likely selling their BTC on OTC or spot exchanges.
In a tweet posted on December 10, 2020, Ki Young Ju, CEO of CryptoQuant, confirmed this trend:
“Obviously, miners are selling $BTC a lot today. I'm still long, but this is not a good signal in the short-run.”
If he is bullish for Bitcoin in the long term, Ki Young Ju thinks that this is not a good signal in the short term for Bitcoin price. For the moment, the total outflow is not large enough to significantly impact Bitcoin price more than the current $17.5K drop.
Nevertheless, there is a growing risk of a strong correction in the upcoming days.
Can the Bitcoin price fall even more so that it would reach a 30% correction since the new ATH?
This would bring the Bitcoin price into the $13.5K - $14K range. To get there, Bitcoin would have to break major support at the $16K level. So far, every drop in the Bitcoin price has seen institutional investors position themselves to accumulate more BTC.
This strong demand for Bitcoin has allowed the Bitcoin price to consistently rebound and to rise again until now.
We are currently seeing a shift in BTC between weak hands that can't control their emotions and strong hands that have a truly long-term view of Bitcoin. That's why I strongly advise you to take advantage of all these Bitcoin price drops to accumulate more Bitcoin.
You never know when the lowest will be hit. Accumulating more BTC every time in DCA mode will help you accelerate your conquest to own 1 BTC.
Bitcoin's current price range, around $17.5K, is an important level of support. It is currently being tested by the market. If this support is broken, there is a good chance that the Bitcoin price may drop even further in the coming days to test the important support located lower at $16K. As I just explained, the moment of truth will be at this level.
If the Bitcoin price rebounds strongly, we will remain in the uptrend in the short term.
If it doesn't, Bitcoin will probably test lower resistances. The loop would be closed if the Bitcoin price fell in the $14K range. For the moment, the best thing you can do is to remain extremely cautious. Extreme greed is always the dominant feeling in the Bitcoin world:
It is in these moments that winning investors are most careful to keep their emotions under control. This is what I invite you to do.
Stay strong, Stay a Bitcoin HODLer.
