Bitcoin (BTC) Lost Its Footing
In the past few days, Bitcoin (BTC), the first and largest cryptocurrency by market capitalization, has been enjoying a positive price trend since it surpassed $10,000 price level.
The favorable trend raised the expectation of seeing the digital asset at new all-time highs before the end of 2020. However, some analysts are still skeptical of seeing BTC attaining such heights this year.
In the course of the much expected positive trend, Bitcoin surged past $11,000 and headed for $12,000 resistance. After attaining this level, BTC lost its footing. It failed to hold above $12,000, which resulted in a huge price dump within a short period of time.
Bitcoin is now changing hands above $11,000 support level. There is a possibility for a drop below the support level if it fails to regain its surging trend. At the time of filing this report, BTC is trading at $11,120.71, with a relatively 6% price downtrend in the last 24 hours.
Why Bitcoin (BTC) Correction Was Swift
The behavioral analytics firm, Santiment, has recently figured out the possible cause of the price dumb experienced by Bitcoin (BTC) a couple of hours ago.
According to the analytic firm, there were warning signs that showed that daily Bitcoin active addresses were not keeping up with its price surging trend. It further pointed out that a bearish divergence that could result in a swift price correction formed.
Santiment tweeted with a captioned chart, “As BTC scraped above $12k 18 hours ago, there were warning signs flashing that indicated that daily active addresses on the network were not keeping up with the surging price, and a correction would be swift. A telltale bearish divergence formed.”
1) As $BTC scraped above $12k 18 hours ago, there were warning signs flashing that indicated that daily active addresses on the network were not keeping up with the surging price, and a correction would be swift. A telltale bearish divergence formed pic.twitter.com/82KhmTc4F7
— Santiment (@santimentfeed) August 3, 2020
Santiment further pointed out that the huge drop experienced by Bitcoin (BTC) a couple of hours ago was the result of the bearish divergence formed:
“…as the price continued to climb toward $12k in spite of DAA dropping from 1.06m on Friday, to 959k on Saturday (a ~-9.5% drop). As a result of this bearish divergence, Bitcoin fell back to ~$11k in a hurry (a ~-8.3% price drop),” Santiment stated.