WhaleTrades, a Twitterati who tracks the large crypto transactions, alerted that a big whale on BitMEX sold $5 million worth of bitcoin at $9,749.69.
— WhaleTrades 🐳 (@WhaleTrades) February 7, 2020
Bitcoin Calls that Followed
Minutes before the big sell order, Bitcoin had soared above $9,890 to establish a new year-to-date high. However, the rally fizzled within minutes to near $9,737, leaving traders under the impression of a pump and dump behavior.
Full-time trader Salsa Tekila warned about a potential bitcoin flash crash shortly after noticing a long candle wick formation on short-term charts. The analyst said he was exiting all his bitcoin positions because of the “risk of [a] flash dump.”
/7 New yearly highs got sold hard into, I was greedy and didn't close where I should've (9880$).
— SalsaTekila (JUL) (@SalsaTekila) February 7, 2020
Bitcoin’s $150 crash from $9,890 triggered similar bearish calls from other traders. TraderMJ, for instance, confirmed that he was taking liquidity on the possibility of a volatile price reversal. The trader added that he is not going to open any new short position, believing that the market is still in an uptrend.
“Not shorting, because I don’t do that in an uptrend, but tethering up and bit and looking to buy back at either 9700 or 9500 ( preferably 9500),” tweeted TraderMJ.
Large wicks formed during an uptrend – especially those that establish new swing highs – tend to behave as bias-reversal signals. Forex analyst William Adkins writes:
“A long wick indicates buyers have bid the price up. Typically, sellers then move in to take advantage of the high price. The selling pressure drives the price back down. An alert trader can use a long wick to anticipate a change in the direction of price movements.”
A Small Bounce Underway
The BitMEX XBT/USD 15M chart showed the pair attempting a bounce-back. The price pulled back from the intraday low of $9,737, albeit weakly, leaving an impression of an extended bearish correction as the session matures.
So it appears, bitcoin is trending inside a near-term Ascending Channel, now testing its lower trendline as support. A bounce-back from here could show traders’ likelihood of continuing the uptrend. On the other hand, a breakdown could spill fears of a price crash towards the blued 200-period moving average (at around $9,687).
The daily chart, on the other hand, preserved bitcoin’s bullish bias. The price weakened but maintained above a critical support level defined by $9,608 – the 36.8% Fibonacci retracement level measured from a swing high of $20k to a low of $3.2k.
The redded Falling Wedge further indicated that bitcoin is undergoing a breakout to the upside, targetting $13,000.