Here’s What May Have Caused Bitcoin to Nosedive into Its Key Support
- Bitcoin saw a nosedive that caused it to erase all of yesterday afternoon’s gains as a result of the intense selling pressure around $13,800
- This level marks the cryptocurrency’s 2019 highs, and a continued bout of trading at this level could confirm this as a local top
- It is important to note that BTC has found support above $13,200, which is a positive sign suggesting that upside is imminent
- The resistance here isn’t the only factor that may have sparked this selloff
- Analysts are noting that a sudden surge in the U.S. Dollar’s value may have struck a blow to the cryptocurrency as well
Bitcoin and the aggregated cryptocurrency market have been caught within a strong uptrend throughout the past few days and weeks, but this momentum is now showing signs of faltering.
Overnight, BTC witnessed its first harsh rejection seen throughout the course of its recent uptrend.
This rejection caused its price to plummet from highs of $13,800 to lows of $13,200 before it was able to find some support that has since helped slow its descent.
Where it trends next will depend largely on whether or not it can continue holding above its near-term support.
Bitcoin Plunges from Highs as Momentum Falters
At the time of writing, Bitcoin is trading down just over 3% at its current price of $13,200. This marks a notable decline from its recent highs of $13,800 that were set yesterday afternoon.
So far, BTC’s local top coincides perfectly with its 2019 “blow-off top” set in the summer. The resistance here could prove to be significant in the near-term.
However, if broken, a move to fresh all-time highs of above $20,000 would be in the cards.
Here’s Another Reason Why BTC Is Plunging Today
The resistance at $13,800 isn’t the only reason why Bitcoin’s price plunged today.
Its latest decline also coincided closely with a rapid surge in the U.S. Dollar’s value, which BTC has been inversely correlated to as of late.
One analyst spoke about this, noting that it is now imperative that BTC holds above $13,250 – a level it is currently dipping beneath.
“Retrace here on BTC, as DXY is pushing upwards given the surrounding coronavirus pandemic fears. To avoid deviation above the range high, $13,250-13,325 has to hold for support. If that breaks, $12,700 seems next.”
Image Courtesy of Crypto Michaël. Source: BTCUSD on TradingView.
If the U.S. Dollar Currency Index (DXY) continues pushing higher, it may place further pressure on Bitcoin.
Featured image from Unsplash. Charts from TradingView.