The price of Bitcoin abruptly dropped over 3% in under an hour after surging to $13,350, but its high time frame log charts remain highly optimistic.
Three factors likely triggered a quick decline in the price of Bitcoin (BTC) on Oct. 25. First, traders pinpoint the $13,300 to $13,500 area as a major resistance range. Second, futures and options markets are neutralizing. Third, weekend trading is seemingly amplifying volatility.
The $13,300-$13,500 range is a key resistance area for Bitcoin in the short term
Throughout the past week, data from ByteTree shows Bitcoin miners have been selling more than they mine.
BTC possibly saw a sharp correction as it surged to a key resistance range, which sellers aggressively defended.
“Upside borrowing/leveraged long exposure will be more prevalent the further up this goes, but right now futures are consistently extended from spot and the friction is obvious. Maybe get one more pop up 13.5-13.8 before a nice sized pullback.”
Futures and options markets are neutralizing
After the week-long rally, the futures market started to show signs of overheating. Although the funding rate of BTC remained at an average 0.01% level, alternative cryptocurrencies demonstrated high funding rates.
The overall cryptocurrency futures market needed pullback to reset or cool down the funding rates of top cryptocurrencies. The Bitcoin Fear and Greed Index is also showing "extreme greed" in the market, which makes a healthy pullback a positive trend for BTC.
Weekend trading typically spurs volatility
Meanwhile, the options market also faces expiration worth $750 million in about six days that could trigger volatility.
There are many potential factors that could cause volatile price movements to occur. Two main factors are lower the volume during the weekend and the anticipation of the Sunday weekly candle close.
If the price of Bitcoin stays over $12,000 in the next 15 hours, it would mark the first weekly candle close above $12,000 since January 2018.
One popular technical analyst known as "Squeeze" emphasized that the macro view of Bitcoin remains optimistic, particularly as exchange BTC balances continue to drop reducing available supply. He said:
"Bitcoin's macro view remains bullish as the Exchange $BTC Balances continue to decline sharply since March (whales are not yet selling. Even at $13,000.) There's also around 136k BTC currently locked in WBTC/RenBTC."