Risks of Bitcoin Plunging to $8.8K Persist Despite Strong Intraday Gains
Bitcoin retraced to the downside sharply after testing levels near $10,500 on profit-taking sentiment. Nevertheless, the cryptocurrency so far has failed to extend its bearish momentum below a certain Fibonacci support level.
The 61.8 percent level of the Fib retracement graph, ranging from a swing high of $12,927 to a swing low of $4,808, serves as a firm price floor. Observers could see a downside rejection if the BTC/USD gets there; a bearish move towards it leads to a quick rebound, as has happened in the last six days of trading.
In retrospect, the 61.8 percent level coincides with $9,826, while $10,000 serves as the ideal level for a rebound. On the whole, bears are attempting to break the $9,800-$10,000 area to confirm a medium-term downside bias.
Bitcoin to $8.8K
But analysts have expressed their concerns over the repeated test of the same area. They think the assaults would make the levels weaker, leading BTC/USD further south. The fears also follow the pair’s continuous rejection of breakout attempts above the $10,225-$10,300 area.
Part of the traders’ bearish outlook also has to do with $10,000’s poor history as support. The last two years have seen the six-figured level capping Bitcoin’s downside bias from flourishing, only to break later. Once the price flips below the $9,800-10,000 area, it converts into a rigid resistance range.
The last time Bitcoin broke above the area was in July 2020. But its quick pullback later pointed to a weaker bullish bias. That could be the reason why BTC/USD has fallen back into its range.
There is no record of $9,800-10,000 that shows it as an area of sharp rebound. It has–though–served as a range that confirms breakout/breakdown moves. That said, if bears can close the price below it, then they could easily take BTC/USD towards the next Fib support level sitting at $8,869.
Some analysts still anticipate a reversal scenario. Marcin Kacperczyk, the co-founder of YellowBlock, thinks Bitcoin would hold $10,000 as its support.
“One argument in favor of a breakdown from here is that the more support is tested, the weaker it becomes,” he said. “While I agree, we saw what happened when $BTC ranged for 2.5 months and tried many times the lower bound range. Still not convinced we’ll lose 10k that easily.”
Michaël van de Poppe, an Amsterdam-based stock and crypto trader, meanwhile noted that holding $10,000 as support would send BTC/USD back to higher price levels.
“[We are] still holding between two crucial levels here,” he said. “Support at $10,000 is holding, while a breakthrough of $10,225-10,300 could trigger a continuation towards $10,600 and possibly $10,800-11,000.”
Still holding between two crucial levels here.
Support at $10,000 is holding, while a breakthrough of $10,225-10,300 could trigger a continuation towards $10,600 and possibly $10,800-11,000. pic.twitter.com/k3DWVm2qLc
— Crypto Michaël (@CryptoMichNL) September 9, 2020
BTC/USD was trading at $10,296 at the time of this writing, up 0.7 percent into the Thursday session.