Earlier Sunday, Bitcoin (BTC) suddenly fell off a cliff after its latest bout of bullish price action. Within a few minutes’ time — yes, literally a few minutes — the leading cryptocurrency slipped by 7%, plunging from $9,150 to $8,600 (as low as $8,450 on some crypto exchanges). Altcoins followed suit, posting equally as harrowing losses, with Ethereum and XRP tumbling 6% themselves.
Despite this strong drop, which comes as BTC was trying to flip the key $9,000 psychological and technical resistance into a support level on a macro basis, analysts have remained bullish on Bitcoin. Here’s why.
Bitcoin’s 6% Drop Is A Bullish Sign, Kinda
Prominent cryptocurrency trader The Boot, who famously turned 0.6 Bitcoin into millions of dollars worth of the cryptocurrency in just over a year, noted that the selling volume seen after the 6% drop seemed “low AF.”
With this in mind, the trader asserted that it may be wise to “scale into buying the dip until proven wrong,” further explaining that a bearish setup, constituting a lower high and breaking support, has yet to form on the short-term charts.
An analyst going by Thrillmex echoed this optimism, posting a tweet in the wake of the dramatic collapse. He showed in his tweet the BTC quickly wicked higher on the four-hour chart after briefly tapping the key supports at $8,463 and $8,577, implying something of a swing failure pattern or a “long liquidity hunt.”
While this long bottom wick isn’t indicative of a reversal, the fact that BTC managed to close the candle above the aforementioned supports shows that not all hope is lost for bulls.
Similarly, another trader pointed out that while the 200-day moving average was lost in this drop, the 9-day moving average has decisively held. This is important as Bitcoin has ridden the nine-day moving average higher over the past 10 days.
The fact that it is trying to hold this level could suggest that this drop is just a short-term correction before another push higher towards the $10,000s.
Featured Image from Shutterstock