Bitcoin (BTC) Plunged 19% in a Day – Can the Bulls Take the Lead Again?

Bitcoin (BTC) Plunged 19% in a Day – Can the Bulls Take the Lead Again?

 Published: September 9th, 2021

Bitcoin wiped out $4 billion market liquidation with a 19% plunge in a single day. According to some prominent analysts, this massive selling pressure came from the overleveraged buying positions in the future market.

As per the CryptoQuant data, the quick drop in the open interest has caused the market crash. When buyers become overconfident, they tend to take excessive buying positions that may trigger liquidation orders. However, another metric, LTH SOPR measures how long-term investors are spending their Bitcoin. After the May 2021 pullback, Bitcoin’s LTH SOPR did not move below 1 level. Therefore, we can consider that long-term investors did not drive the most recent plunge. On the other hand, miners have sold almost 2855 BTC this week, which might influence the recent sell-off, but still, the amount is lower than 40,000 Bitcoin sold by miners in 2020.

It is often hard to identify the exact reason for the price movement in any trading instrument. Therefore, investors should make smart decisions with proper risk management rules to get the ultimate success.

Let’s see the upcoming price direction from the BTC/USD technical analysis:

BTC/USD Daily Chart

BTC/USD Daily Technical Analysis 9 September 2021

Bitcoin showed an impressive recovery from the 30,000 level when the tension of excessive energy usage was over. Miners started to focus on renewable sources of electricity that ultimately started the recovery from the market crash. The price moved above the dynamic 20 EMA daily and grew higher with tremendous buying pressure. However, the recent collapse in the price from 59,000 to near the 42,500 level with an impulsive bearish pressure.

In the above image, we can see how the price moved below the dynamic 20 EMA with a bearish daily close, eliminating the price action of the last 30 days. In the indicator window, MACD Histogram turned bearish and made a new low, which a sign of an upcoming bearish pressure. However, the price is still above the 42,500 significant event level with a long wicked bearish daily close. Therefore, bulls may regain momentum if the price fails to break below the 42,500 event level. In that case, investors should see how the price is trading at the intraday chart.

BTC/USD H4 Chart

BTC/USD H4 Technical Analysis 9 September 2021

According to the Ichimoku Kinko Hyo, Bitcoin moved below the Kumo Cloud with an H4 close. Meanwhile, Senkou Span moved below the Senkou Span B and heading down while the Chikou Span moved below the price. Therefore, the price has shown the primary sign of a trend reversal, but investors should wait for a new intraday swing to consider the bearish pressure vital.

The above image showed how the price moved below the Kumo Cloud while the Tenkan Sen moved below the Kijun Sen and started to work as minor resistance. Moreover, the RSI moved below the potential 30 levels and heading downwards.

Therefore, based on the H4 context, the bearish possibility is valid as long as the price is trading below the Kijun Sen. In that case, the price may move down towards the 40,000 level. On the other hand, a strong rebound with an H4 close above the cloud resistance would invalidate the current sentiment. Therefore, the price may resume the recent bull run towards the 60,000 level.

BTC/USD H1 Chart

BTC/USD H1 Technical Analysis 9 September 2021

In the intraday chart, we can see that the price moved down from the most recent high volume level of 46,892.92. Moreover, the price moved below the dynamic 20 EMA and weekly vwap level with a bearish H1 close.

However, in the indicator window, we can see that the MACD Histogram is still bullish, and there is no sign of divergence. Therefore, any solid H1 close above the 47,000 swings high may initiate the bullish recovery. On the other hand, bears should wait for a breakout and bearish H1 to close below the 45,000 level to join the bearish possibility towards the 42,500 level.

Should You Try Buying BTC/USD?

As of the above discussion, we can say that the BTC/USD bulls may attempt another bullish movement until the price breaks below the 42,500 levels with a bearish daily close. The ultimate target for bullish pressure will be towards the 60,000 level, but a break below the 42,500 level with a bearish D1 close may lower the price towards the 35,000 level.

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