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Bitcoin hasn’t fared too well over the past day and a bit. After finding a local top at $10,300 on Wednesday morning, the price of the leading cryptocurrency fell off a cliff. Effectively literally.
As covered by NewsBTC, the asset tanked from $10,300 to as low as $9,250 — a drop of just over 10% — in a few hours’ time, liquidating over $100 million worth of long and short positions on BitMEX in the process, catching traders with their pants down.
Despite the fact that this move was extremely bearish, there was a silver lining: after plunging under $9,300, the cryptocurrency managed to bounce back, holding above $9,500 on a number of short-term closes and for the daily candle close.
Related Reading: Trader Who Nailed Bitcoin’s $3,000 Bottom Fears More Downside is Near
The fact that Bitcoin is currently holding $9,500 (just look at the chart below from “Exitscammed,” analysts say, adds to the bull case for the cryptocurrency moving forward.
Interesting that we haven’t had a single hourly close below 9556 weekly level.
Being defended pretty hard atm. $BTC pic.twitter.com/ymndBs0LCv
— exitscammed (@exitscammed) February 20, 2020
The Importance of Bitcoin Holding $9,500
TradingView analyst CryptoBullet, in an analysis published Thursday, explained the importance of $9,500, calling the level “major support.” As to why this is the case, the analyst pointed to a confluence of factors:
- The region around $9,500 has been a long-time “strong” horizontal level for Bitcoin, often acting as a reversal point for bears when approached from above and a reversal for bulls when approached from below.
- This level is the 0.5 Fibonacci Retracement level of the drop from $14,000 to $6,400. The 0.5 Fibonacci level is often significant in markets.
- $9,500 is a high-volume node per the VPVR.
- The 200 exponential moving average on the four-hour chart is currently sitting around $9,500, just below the current price of the cryptocurrency. Importantly, this level is a moving target as it is a moving average.
The importance of $9,500 has been echoed by a trader going by George. Per previous reports from this outlet, he said “Keep it simple, $11,700 is next. Invalidation [if there is a] clean break below $9,500.”
George’s comment came hot on the heels of a similar one from Filb Filb, the pseudonymous analyst remarked that “every time Bitcoin turns $9,500 to support [on a weekly basis], it goes to $11,500.”
Can BTC Hold This Price?
The question remains: can Bitcoin hold $9,500 and keep the short-term to medium-term uptrend intact? According to a number of technical signals, it’s possible.
Early this week, Bitcoin formed a golden cross, with the 50-day moving average crossing over the 200-day moving average.
When this signal last formed in April 2019, the price dropped 11% in the two days after the event. Bitcoin, in the two days following the recent golden cross, has dropped by 11%.
History repeating itself will see BTC continue its trend higher in the coming days by not falling further.
Fun fact: Bitcoin dumped 11% in the two days after the last golden cross in April 2019, then proceeded to rally ~170% to $14,000. pic.twitter.com/i3XYS5XNII
— Nick Chong (@n1ckchong) February 20, 2020
Featured Image from Shutterstock
