The bitcoin (BTC) price pulled back after US stocks began to correct on the back of mounting worries over the pandemic. The digital currency's price pulled back below $18,800 on Tuesday after breaking the resistance at $19,500.
For traders, BTC is currently in an unfavorable position because it’s both far from its resistance level and the major support area. So far, throughout the past week, BTC has remained relatively comfortable above the $18,500 support level, following three successful recoveries. But with continued retests of the same support area, buying or longing BTC at $18,500 has become less compelling.
Many experts/analysts believe that there will be a correction phase occurring in the Wall Street after the six-week rally. Technical indicators are also pinpointing at an overheating equities market, which could result into losses in the alternative investments like Bitcoin.
According to data from CryptoQuant, miners that were previously inactive began to sell Bitcoin once again. In a private note to its clients, analysts said that the “Miner’s Position Index” reached a new yearly high. This is indicative of miners applying selling pressure on Bitcoin, which raises the probability of further consolidation or a larger price drop.
Furthermore, CoinTelegraph in its recent article said that the market analysts feel that BTC is struggling at a critical level. "Generally, analysts point toward the $19,500 to $19,600 range as the important resistance area in the foreseeable future. Above it, BTC has the potential to break through a new all-time high and continue the rally," the article stated further.
Since October, BTC's correlation with gold and S&P 500 has been decreasing. However, a decline in the equity markets will also likely result in a pullback in BTC.
Thus, traders expect BTC's support level to be anywhere between $14,000 to $18,000. The timing of the growing uncertainty in the Bitcoin market is noteworthy because it coincides with an ambivalent U.S. stock market, explained the CoinDesk article.
Although the sentiment is turning negative, JP Morgan strategists feel that the market is still in the middle of a bull trend. They explained that the “long equities” trade is overcrowded and the possibility of a January correction exists.
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