Bitcoin has managed to lose over 20% since the start of this week, coinciding with the launch of Bakkt’s physically settled futures contracts. The price fell from around $10,000 to $9,600, followed by another sharp decline bringing it under $8,000.
Multiple theories have been put forward to explain the drop, ranging from the lackluster performance of Bakkt’s contracts to an unexplained drop in mining hash rate and market manipulation ahead of CME futures expiry.
Whatever it was that caused the drop also triggered hundreds of millions of long liquidations on BitMEX, putting additional downward pressure on the price.
However, technical analysis indicates that a price move up or down was imminent, but given the descending triangle formed over the last two months, it was likely to go south. On the bright side, the current price of around $7,800 is at a key support level, presenting a decent buying opportunity for those who were waiting for ‘a dip’ before getting in.
The current support extends all the way to $7,500, after which the next support lies just above $6,000, but bulls will be hoping it doesn’t come to that.
It would be interesting to see how the price reacts after tomorrow when around 40,000 Bitcoin options are set to expire and CME’s September futures are settled.
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