On December 8, before the Bitcoin price saw a strong correction, a pseudonymous trader known as “Crypto Capo” said a larger drop might come. At the time, BTC had seen a minor rally, which the trader described as a “dead cat bounce.” Since then, BTC dropped from $18,300 to $17,700.
Other traders also foresee $17,000 as the next potential bottom for Bitcoin because it marked the top of a major weekly candle in January 2018.
In technical analysis, previous peaks often act as a support area when an asset’s price breaks out.
Short time frame charts, like the 4-hour price chart, also shows that $17,000 is a critical support area.
Some traders believe Bitcoin could drop even lower than the $17,000 support level. If so, it could see a double bottom at the $16,000 region.
A strong argument for why Bitcoin won’t likely drop below $16,000
When the Bitcoin price saw its first major correction during its recent multimonth uptrend, it dropped to around $16,300.
At the time, the market was rattled because BTC reached $19,300 merely two days before the abrupt correction occured.
But, when BTC reached the $16,000 region, the U.S. market saw strong buyer demand. BlockTower’s Avi Felman noted that Coinbase saw a transfer from “weak hands to strong hands” as BTC rebounded from the $16,000 area.
Decent and extended Coinbase selling at the local bottom for the first time this rally suggests to me that retail is slowly picking up. Fairly obvious transfer from weak hands to strong hands over the last 48 hrs. pic.twitter.com/C1UefobR6D