Bitcoin broke the $94k resistance on Tuesday but faced slight selling pressure shortly after.
The surge from $89,558 to the current high was surprising to many, as the apex coin was off to a rocky start in the early hours of Tuesday. The 4-hour chart shows that the asset trended sideways for most of the day before breaking out in the session starting at 12:00 UTC.
BTC is up by over 3% since the start of the day, but questions about why it surged hang in the air. There are several speculations as to why it happened.
The most concrete is that the market is reacting to US economic data. BLS released the job opening report for Oct, and it came in higher than anticipated. The median forecast was 7.2 million. However, the data came in at 7.7 million, leading to bullish reactions from investors.
BTC has since struggled to resume the uptrend as momentum waned on Tuesday. The asset ended the previous session with no significant gains, as the FOMC meeting concluded without surprises.
Investors adopted a wait-and-see approach following several such events failing to meet expectations. As predicted by many, the 25 bps slash happened, and prices reacted with indifference. One reason this happened was that the surge on Tuesday had already priced in the cut.
Such a reaction is not new, as a similar incident happened on Sept 17 when the apex coin experienced gradual increases in the days leading up to the cut. A recent post of Crypto Rover indicated that some whales trimmed their long positions before the announcement.
They were doing so to hedge against further declines, given the precedent, and they were not wrong. Current prices show that BTC is down by almost 2% on Thursday.
Bitcoin Could Plummet Further
Market analyst IT_Tech_Pl drew attention to the huge number of short-term holders currently sitting on losses. He presented a chart that showed the declining cost basis in relation to price. As it stands, this cohort has their CB around $103k.
BTC is currently trading at $90k, over $13k lower than the CB. The current price may be a double-edged sword in relation to impending price movement. On one hand, since losing the key level, the cohort may decide to start selling. Their action will undoubtedly lead to further price decline.
Conversely, this group may decide to resume accumulation. The chart shows a declining cost basis, indicating that some have resumed buying amid the price decline.
However, this does not guarantee a massive surge this week. Since the rate cut failed to excite, the events that played out in September are more likely.
Down to $90k from $94k, the downtrend may worsen as indicators on the 1-day gradually flip bearish. The apex coin broke out of the bollinger bands during the uptick. Such events normally signal the end of an uptrend, and prices may decline afterward.
Bitcoin dropped to $89k a few hours, barely 24 hours after the breakout. It may retrace further to the lower band at $85k if the downtrend continues.
Traders are positioning for such a move as they increased their short positions. Data from Coinglass showed that more than 50% of the positions added in the past hour were shorts.
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