Bitcoin price fell below $ 16,400 the day after a massive short-term correction. On-chain analyst Willy Woo attributed the withdrawal to an overheated bull run.
Before the retreat, the bitcoin derivatives market showed signs of extreme buyer demand. The market was dominated by buyers and long-time contract holders, making BTC vulnerable to a crash.
After the market settled and stabilized, Woo said the next few weeks could be an ideal time to accumulate at lower prices.
The 15-minute price chart of Bitcoin. Source: BTCUSD on TradingView.com
Inbound Bitcoin Consolidation
Traders and analysts generally predict a consolidation of several weeks. Bitcoin’s sudden decline came in such a short time that the order books were destroyed and the market decimated.
The futures market would take time to rebuild its open interest and see appetite to trade BTC after a massive drop. Nearly $ 2 billion worth of futures contracts were liquidated today, making it one of the worst market crashes alongside the March 2020 decline.
Therefore, over the next few weeks, Woo realized that a consolidation could take place. He said::
“Margin longs are beaten until they run out. Was bullishness was much overheated. Alternating currents are neutral; Spot sellers are matched with buyers. Basics a great one. The next weeks? A great time to get cheap coins for 2021. “
What happens in the short term?
Traders say the recent correction will benefit both Bitcoin and the rest of the cryptocurrency market.
– HornHairs 🌊 (@CryptoHornHairs) November 26, 2020
A pseudonymous trader called “CryptoHustle” said the consolidation would allow Bitcoin to generate fresh momentum to break the all-time high.
The trader also noted that a period of consolidation for Bitcoin would likely lead to another altcoin rally. He said::
“This correction of $ BTC in ath resistance is the best that can happen to the trend… 1. The longer we consolidate, the more momentum the $ 20,000 breakout will have. 2. The consolidation of $ BTC likely means that the alts will bounce heavily and continue to recover. “: