Bitcoin (BTC) price fell 3% in less than three hours as the US stock market collapsed. After the retreat, most traders are neutral or slightly bearish on BTC’s short-term trend.
Traders and on-chain analysts are now setting $ 12,500 and $ 11,973 as the two levels to watch for the bitcoin rally to continue.
Why $ 12.5,000 and $ 11.9,000 are critical to the current Bitcoin rally
Bitcoin price fell sharply that day due to the concurrence of key macro factors.
JPMorgan said US President Donald Trump’s re-election would be the most favorable outcome for the stock market. The investment bank’s analysts wrote:
“We see an ‘orderly’ Trump win as the cheapest outcome for stocks.”
Given that expectations of a democratic sweep remain relatively high, this could have caused the markets to rattle.
Above election risk, the US recorded a new high in daily COVID-19 cases. In addition to fear of the pandemic, House spokeswoman Nancy Pelosi said the Trump administration was opposed to the stimulus package.
The Dow Jones Industrial Average (DJIA) fell nearly 1,000 points in a single session. When the US stock market slumped, BTC collapsed, falling around 3.4% in a matter of hours.
Even so, technical analysts believe it is difficult to conclude that the dominant cryptocurrency will see a prolonged decline.
Currently, the $ 12,500 support level remains a critical area for buyers to defend for three reasons.
First, it is close to the 10-day moving average on Bitcoin’s daily chart. Second, it’s the top of the previous August 17th summit, which makes it a major level of support. Third, it has large whale clusters, which makes it an area of interest for high net worth investors.
As long as BTC is defending $ 12,500, the chances of an uptrend remain high. If Bitcoin can stay above $ 11,973 despite the rapid retreat, the near-term outlook remains particularly positive.
Researchers at Whalemap, who track the activity of Bitcoin whales, identified $ 11,973 as the level to sustain the uptrend. They said:
“$ 11,973 is the level $ btc needs to hold in order for the uptrend to continue.”
A support retest can reinforce the current BTC uptrend
Even if BTC tests the low support level of $ 12,500, traders believe it could mean a healthier uptrend for BTC.
The price of Bitcoin has increased 15% since Oct. 17, with barely any decline, showing strong momentum. After such a large rally, a period of consolidation or a short-term pullback could be beneficial for BTC. Cryptocurrency trader Scott Melker said:
“I have orders of $ 12,100 to $ 12,500 in case we see a return on the daily TD9. Like I said, I would ideally want some healthy backtracking to collect more vapor for the next push-up. A deeper return than below would be better. “