Bitcoin Price Drops To $11,600: What Happened?

Bitcoin is experiencing a pullback to sub-$12,000 levels after reaching its new 2020 high of $12,486. Currently trading sideways at $11,700, after dropping to $11,600 Wednesday, analysts consider this a health retracement needed for a stronger push toward higher levels this year.

Since Bitcoin is rarely above $12,000, this level represents unchartered territory for the benchmark cryptocurrency. The weekly chart is showing $11,700 to $12,000 as a major resistance area and an important support if they are broken. The next major resistance in the weekly chart, if $12,000 is broken, rests at $13,700, an additional $2,000 from the current levels.

Pullbacks have generally happened whenever Bitcoin’s price rise dramatically.

When Bitcoin went from $7,400 to $10.500 in February, the following month saw the sharpest pullbacks in Bitcoin’s history, represented by an immense selling pressure that pushed the price below $4,000. People would argue that the March 2020 crash is a rare event when all global markets got decimated, but there was also a 20% decrease from May 7 to May 10 which saw Bitcoin dropping from $10,100 to $8,000 in four days, and a 15% decrease from June 1 to June 27, causing Bitcoin to drop from $10,400 to $8,800 in less than a month.

This led analysts to infer that the current pullback is important if Bitcoin is to increase further. The two-month consolidation at $9,000 to $9,900, analysts argued, gave Bitcoin the volume to plow past $10,000 and hit $11,000 in one day last July 27. Full-time trader Michael van de Poppe said he would not be surprised if BTC will trade sideways between $12,200 and $11,200.

One important factor that separates this week’s price decline to that of March is the selling pressure. The selling pressure has declined significantly since June, Cointelegraph reported. Selling pressure could be indicated by the number of Bitcoin inflows to exchanges, and according to analytics firm Glassnode, there are fewer Bitcoins on exchanges now than months ago.

“Currently 2.6M BTC are being held on exchanges. Significantly lower than the last time BTC hit a local top a year ago (2.8M), and lower than before the sell-off in March (2.9M),” Glassnode said on Twitter.