Why Did Bitcoin Break $10,000 But Crashed Shortly After?
It seemed that Bitcoin was doing great and bulls were waiting for that crucial break of $10,000. On June 1, the breakout finally happened and BTC touched $10,380 on Binance and $10,500 on other exchanges. A massive 8% bull break within 1 hour, everything was looking good.
Unfortunately for the bulls, Bitcoin only continued trading sideways and had no continuation. Around 15 hours later, the big flash crash occurred wiping out all the previous gains and some.
What Happened Exactly?
Everyone knew the $10,000 resistance level was a stubborn and crucial level to beat. Bitcoin tried to break it several times in May but got rejected after every single try.
The fundamentals were also great for Bitcoin, the Bitcoin open interest was hitting ATHs on many exchanges and Grayscale, a major trust fund was buying Bitcoin at increasing rates.
Everyone thought the breakout would impulse Bitcoin up to $11,000 and possibly $12,000 as there is little to no resistance until the ATH at $20,000.
The problem with the recent breakout was the volume and how it took place. One single 1-hour candlestick with no continuation is always a red flag. An organic breakout is always followed by continuation and doesn’t occur over a few minutes only but throughout a few hours or days.
Bitcoin continued trading sideways for 15 hours, another red flag for the bulls. The crash is similar as it also happened over the span of 1 hour and has seen no continuation for now.
The infamous ‘Bart Simpson’ pattern can be seen again on the hourly and 4-hour charts. This funny but real pattern happens when an asset trades sideways after a volatile move and then breaks in the other direction. This pattern represents possible market manipulation as it is rare for an asset to have an important break and then lose everything within the next few hours.
Either way, there are some clear fundamental metrics showing the interest in Bitcoin has been growing significantly in 2020. The number of addresses holding 1 or more Bitcoins has been increasing over the past 5 months, even after the crash on March 12, the number of addresses kept increasing.
Similarly, Bitcoin futures open interest has been increasing after the crash as well. Most metrics and indicators are showing that the overall interest in Bitcoin is still growing despite the lack of price action.
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