Rejected at $13K: Bitcoin Drops 10% in Sudden Market-Wide Correction
Fresh off its highest level in two weeks, bitcoin’s price corrected sharply lower Thursday, as the combination of profit-taking and bullish exhaustion knocked the market back a few notches.
Bitcoin ran into strong resistance late Wednesday, which invited a fresh wave of selling pressure on Thursday. Peak-to-trough, the bitcoin price was down by as much as $2,000 on Thursday, according to Bitstamp data. At the time of writing, the BTC/USD exchange rate was down 3.4% at $11,690. The price is down 10.8% over the past 24 hours.
Even with the decline, bitcoin’s daily relative strength index (RSI) remains in a healthy range. The accumulation/distribution line clearly shows that demand far outstrips supply.
Bitcoin’s sharp correction triggered an immediate selloff in altcoins and tokens. As a result, bitcoin’s dominance rate swelled to 65.5%, the highest in over two years. Bitcoin’s dominance rate is the percentage of total cryptocurrency market cap held in BTC.
At current values, bitcoin’s total market capitalization is $207.1 billion, according to CoinMarketCap. It peaked around $245 billion last month.
Bull Market Still Strong
Despite the sharp pullback, bitcoin’s long-term bullish view remains intact. The recent drop in price shouldn’t be viewed in isolation, but as part of the ebb and flow of a new bull trend. As Hacked previously reported, sharp corrections are common for bitcoin, even during bull markets. Since the start of the new four-year cycle, the largest cryptocurrency has experienced only one 30% correction.
That too was picked up by fairly quickly by the bottom pickers. Bitcoin peaked near $13,900 on June 26 before plunging into the sub-$10,000 range six days later. After a brief consolidation trend, the price returned higher and eventually peaked around $13,200 on Wednesday.
By returning above $13,000, bitcoin negated fears of an imminent breakdown that usually accompanies a sustained trend of lower highs. At the same time, it’s clear that the market is experiencing temporary bullish exhaustion following the parabolic run of May and June. In this environment, trade volumes are expected to decline or moderate as some of the mania exits the market.
Long-term, bitcoin’s fundamentals are stronger than ever. Adoption is growing, network activity is increasing and anticipation for the May 2020 halving event is building. The combined forces should lead bitcoin higher over the next 12 months.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Chart via TradingView.