Bitcoin Rally Faces Steep Reversal As OTC Desks See Record High Bitcoin Sell-Off at $9k – Forbes

Traders work in a trading pit at the Chicago Board Options Exchange, Monday, Dec. 11, 2017, in... [+] Chicago, as they trade S&P 500 Options, unrelated to bitcoin futures. Trading in Bitcoin futures began Sunday on the CBOE. (AP Photo/Kiichiro Sato)

The Bitcoin price increased by 22 percent in merely two days, catching major investors in the cryptocurrency market off guard. It surged past several key historical resistance levels to peak above $9,400. But, BTC now faces a reversal in the short-term as large Bitcoin holders look to take profit from the recent rally.

According to a cryptocurrency options trader known as "Theta Seek," several over-the-counter (OTC) desks saw record high levels of sell-off as the Bitcoin price hovered over $9,000.

When BTC initially increased above $8,000, it broke its 200-day simple moving average (SMA), 200-day exponential moving average (EMA), and the 0.618 Fibonacci level calculated in between $3,600 and $14,000. These three levels are considered as the most crucial levels in technical analysis, especially in evaluating long-term trends.

As Bitcoin rapidly broke out of the $8,000 region onto the $9,000s, data shows that investors rushed to sell the dominant cryptocurrency in the $9,000 to $9,400 range.

"Spoke to a couple of OTC desks and heard that there were record amounts of BTC being sold at above 9K,." the trader said.

The abrupt upsurge of sell orders in the OTC market coincided with stacking sell orders on the OKEx futures exchange. OKEx is one of the two exchanges alongside Huobi that formed a relationship with the government of China to facilitate trades for Chinese investors.

Bitcoin researcher Nik Yaremchuk shared the orderbook of OKEx on top of the price chart of Bitcoin, and it showed significant selling pressure above $9,000.

Bitcoin orderbook on OKEx shows stacked sell orders

Based on market data from Skew, OKEx now has the highest open interest for Bitcoin futures in the global market at $710 million, as it overtook BitMEX. As such, the selling pressure coming from OKEx can have a strong effect on the short-term price trend of BTC.

One variable that could sustain the momentum of Bitcoin in the upcoming two weeks approaching the block reward halving is all-time high volume on top spot exchanges.

Binance, Coinbase, and several other leading spot platforms saw record breaking volumes in the last three days. It led to the theory that the recent Bitcoin price spike was primarily triggered by actual demand from retail investors rather than spoof orders in the futures market.

Daily Bitcoin spot exchange volume verified by Bitwise Asset Management

When a Bitcoin rally is triggered off of highly leveraged trades in the futures market, it leaves BTC susceptible to a severe correction in the near-term. In October 2019 and February 2020, as an example, the Bitcoin price fell from $10,500 to $6,400 within a month after surpassing $10,000.

Accumulation of BTC in the spot exchange market strengthens the fundamental basis of an extended Bitcoin recovery. It reduces the risk of a steep downtrend in the intermediate-term and wild price swings in the short-term.

See the original post here:
Bitcoin Rally Faces Steep Reversal As OTC Desks See Record High Bitcoin Sell-Off at $9k - Forbes