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3 reasons Bitcoin suddenly dropped 3% in 1 hour and recovered

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Three factors likely triggered a quick decline in the price of Bitcoin (BTC) on Oct. 25. First, traders pinpoint the $13,300 to $13,500 area as a major resistance range. Second, futures and options markets are neutralizing. Third, weekend trading is seemingly amplifying volatility.

The $13,300-$13,500 range is a key resistance area for Bitcoin in the short term

Before the sudden price drop occurred, BTC soared from $13,127 to $13,350. The dominant cryptocurrency rallied swiftly to an area of interest for sellers as more miners moved BTC to exchanges.

Throughout the past week, data from ByteTree shows Bitcoin miners have been selling more than they mine.

BTC possibly saw a sharp correction as it surged to a key resistance range, which sellers aggressively defended.

Some technical analysts anticipated the price of Bitcoin to rise to around $13,500 before seeing a pullback. Before the volatile price action occurred, cryptocurrency trader Cantering Clark said:

Upside borrowing/leveraged long exposure will be more prevalent the further up this goes, but right now futures are consistently extended from spot and the friction is obvious. Maybe get one more pop up 13.5-13.8 before a nice sized pullback.”

2-hour price chart of Bitcoin with key support levels. Source: TradingView, Michael van de Poppe

Futures and options markets are neutralizing

After the week-long rally, the futures market started to show signs of overheating. Although the funding rate of BTC remained at an average 0.01% level, alternative cryptocurrencies demonstrated high funding rates.

The overall cryptocurrency futures market needed pullback to reset or cool down the funding rates of top cryptocurrencies. The Bitcoin Fear and Greed Index is also showing “extreme greed” in the market, which makes a healthy pullback a positive trend for BTC.

Bitcoin Fear & Greed Index. Source: Alternative.me

Weekend trading typically spurs volatility

Meanwhile, the options market also faces expiration worth $750 million in about six days that could trigger volatility.

During the weekend, particularly on a Sunday, the volatility of Bitcoin and the cryptocurrency market tends to increase.

There are many potential factors that could cause volatile price movements to occur. Two main factors are lower the volume during the weekend and the anticipation of the Sunday weekly candle close.

If the price of Bitcoin stays over $12,000 in the next 15 hours, it would mark the first weekly candle close above $12,000 since January 2018.

Weekly price chart of Bitcoin. Source: TradingView.com

As such, while BTC continues to see high volatility, the optimism surrounding its high time frame log charts are buoying the general market sentiment.

One popular technical analyst known as “Squeeze” emphasized that the macro view of Bitcoin remains optimistic, particularly as exchange BTC balances continue to drop reducing available supply. He said:

“Bitcoin’s macro view remains bullish as the Exchange $BTC Balances continue to decline sharply since March (whales are not yet selling. Even at $13,000.) There’s also around 136k BTC currently locked in WBTC/RenBTC.”





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PlanB feeling ‘uneasy’ as 41% of his followers tip $100K BTC won’t happen this year

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PlanB, the brainchild behind the Bitcoin stock-to-flow model, has revealed he is feeling “uneasy” about his renowned price predictions due to the recent downtrend in markets.

The stock-to-flow (S2F) model, which has predicted BTC prices with some degree of accuracy over the past two years, has been called into question by some of his followers in a recent Twitter poll.

The anonymous analyst surveyed his followers on June 21 asking them what price they thought BTC would reach by the end of the year. He used the results to compare them to a similar survey in March when market sentiment was overwhelmingly bullish.

Of the 124,595 respondents to the latest poll, 41% thought that BTC prices would remain below $100K by the end of the year, which would invalidate the S2F model. That’s two and a half times the 16% in the previous poll who thought the lazer eyes crowd would be disappointed this year.

PlanB who originally published the price predictor in March 2019, pinned a message admitting that even he feels a little “uneasy” when BTC prices deviate from the model. However, the analyst noted that the model had managed to hold previously in March 2019, again in March 2020 when the pandemic caused a global market meltdown, and once more in September 2020.

Preston Pysh, the founder of The Investors Podcast Network, commented that it was difficult for a model to account for a blizzard of bad news that has accelerated the market downturn.

“You mean your model doesn’t account for 40%+ of mining rigs getting banned & forced to turn-off & relocate to various parts of the world…and with no forward notice to companies/entitles for the extraordinary expense to their heavily denominated BTC treasuries/retained earnings.”

The model is a calculation of a ratio based on the existing supply of Bitcoin against how much is entering circulation. The scarcer the asset becomes due to the four-year halving cycles the higher the price. PlanB’s model predicts an average price of $288K over the next three years.

Related: $288K BTC price ‘still in play’ says PlanB as Bloomberg champions Bitcoin halving

At the time of writing, Bitcoin had gained 2.9% over the past 24 hours to trade at $34,450 according to CoinGecko. The asset is currently 45% down from its all-time high of $64,800 on April 14.





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Bitcoin in uptrend but BTC may never beat gold’s $10T market cap — ex-NYSE head

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Bitcoin (BTC) is on a “lower left to upper right trend” and its volatility should not scare investors, the former head of the New York Stock Exchange says.

In an interview with CNBC on June 23, Thomas Farley revealed long-term convictions about Bitcoin and dismissed concerns over BTC price losses.

Bitcoin: Going up, but not “up only”

Coming a day after CNBC pundit Jim Cramer admitted that he sold his Bitcoin stash, suggesting that BTC/USD was going as low as $10,000, Farley provided some much-needed mainstream bullishness.

“With respect to the recent price moves, I’m kind of sanguine about them — Bitcoin’s a very volatile asset class, in part because it’s a new asset class,” he told the network.

“I have no doubt it’ll go up, it’ll go down over the long term — I still think it’s a lower left to upper right trend and I think we’re going to see that play out over five years.”

With mining upheaval coming from China still on everyone’s lips, popular mainstream criticism of Bitcoin’s energy usage was also swiftly cast aside as a temporary issue.

“I think this kerfuffle is an interesting conversation, but by and large I think it’ll be resolved because I think the blockchain at its core adds to its efficiency and in fact will add to energy efficiency over time,” he continued.

Less convinced on gold. vs. Bitcoin

When it comes to Bitcoin as “digital gold,” however, Farley was more conservative in his predictions.

Now firmly beneath a trillion-dollar market cap, Bitcoin must transform in order to take on store-of-value safe-havens.

Related: Joining the ranks: Bitcoin’s correlation with gold and stocks is growing

“I think the upper bound for now is gold, which is about a $10 trillion market cap,” he added.

“In order for Bitcoin to one day exceed gold, it’ll have to be more of an accepted form of currency — I’m not sure, frankly, if it ever gets there.”

Proponents argue that Bitcoin, by its very nature, faces just a matter of time before eclipsing gold thanks to the latter’s ultimately infinite supply and inability to beat Bitcoin in all aspects of “money.”

The precious metal saw a major sell-off last week after comments on policy from the United States Federal Reserve.

To beat gold, Bitcoin would need to trade at more than $533,000 with the current supply.