Bitcoin suffered a major drop last week, dropping $ 3,000 from $ 19,000 to the $ 16,500-17,000 range, representing a 10% decline
The sudden drop caught many traders off guard, as the cryptocurrency was trading just a few days ago at no less than 2% below its all-time high of $19,783.
The price of Bitcoin (BTC) has experienced volatility in recent hours. The major digital currency fell within hours, declining sharply after breaking through resistance at $16,000 earlier this week.
What caused the fall?
An algorithmic trader known as “CryptoGainz” explained that the current structure of the Bitcoin market likely triggered a sell-off. The trader pointed to the abundance of sell orders of $16,500 that did not decline when BTC reached $16,400.
Bitcoin’s rally from $10,000 to $19,400 in the past seven weeks seemed, according to experts, overdone on technical charts. The momentum was so strong that the cryptocurrency consistently traded above its 10-day moving average (MA) throughout the rally, despite an overbought reading on the 14-day Relative Strength Index (RSI).
Assets rarely see a 90-degree rally, as speculators tend to post profits at regular intervals, causing prices to dip to their short-term moving averages. The cryptocurrency has experienced several setbacks of 20% or more during previous bull markets.