3 reasons why the price of Bitcoin violently rejected nearly $ 20,000

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Bitcoin (BTC) eventually managed to set a new all-time high, but the digital asset strongly rejected nearly $ 20,000. Chain analysts say the sale of whales and miners, combined with the $ 20,000 level acting as a resistance level, caused a sharp drop.

BTC / USD chart in 15 minutes. Source: TradingView

What prompted whales and miners to sell Bitcoin?

For whales and high net worth investors, liquidity is the most important factor. Since they are dealing with large orders, they need to calculate the slippage their sell orders will cause.

Usually, the best time to sell whales is when the peak of market euphoria meets high demand from buyers. This allows whales to sell their holdings more efficiently without causing massive volatility.

When the price of Bitcoin officially broke its all-time high on Coinbase, this caused the market sentiment to become very optimistic. Shortly after, the whales began to sell, causing large liquidations on the major exchanges.

CryptoQuant CEO Ki Young Ju explained that whale withdrawals were slowing on November 30.

“I called short-term bearish based on selling miners, whale activity on trade and no whale withdrawals. But I knew that enough stable foreign exchange reserves would break $ 20,000 by this year. If the ATH rejection occurs, it could be a huge setback as the whales would sell BTC heavily. “

The confluence of whales keeping BTC on the exchanges, meaning higher selling pressure, and the selling of miners amplified BTC’s slowdown.

Ki also noted that whales have started to deposit Bitcoins in exchanges again, which happens when whales want to sell their holdings.

Is the current recovery just a dead cat rebound?

The price of BTC recovered quickly after dropping to around $ 18,200, climbing back above $ 19,400 within hours.

The rapid recovery likely occurred due to the nature of the fall. As the price fell, the exchanges saw long, cascading sell-offs. As such, BTC likely fell harder than it should have if it weren’t for the big sell-offs.

The recovery has been equally intense on the upside for this reason. Late short sellers could have turned aggressive when BTC fell, causing short-term short-term compression.

In the short term, Bitcoin could see two major scenarios. First, it could consolidate above $ 19,000, which would allow the derivatives market to calm down and open interest to rebuild.

Second, BTC could continue to decline as traders anticipate a high after hitting a record high.

But the macroeconomic outlook for Bitcoin remains very optimistic. Scott Melker, a cryptocurrency trader, pointed out that the November monthly candle closed at an all-time high in BTC, which paints a positive long-term picture for BTC. he said:

“Last month ended just at the highest monthly close of all time. This month ended at an all-time high. Truly flawless graphics. “

In the near term, key support levels for Bitcoin are $ 18,200, $ 17,700, and $ 16,200. There are still large clusters of whales in these areas, which could cause a reaction from buyers.