Bitcoin (BTC) has been seeing significant momentum in previous weeks as its price was approaching the precious $20,000 all-time high. However, an abrupt end came to this glorious rally with Bitcoin price crashing severely over the past 24 hours.
While most investors were celebrating a potential new all-time high, the price of Bitcoin dropped from $19,500 to $16,300, a drop of 15% in less than 24 hours. The majority of the crypto markets also followed suit with alts in the deep red across the board on Nov. 26.
Bitcoin loses crucial level for support and drops heavily
The crucial area to hold between $18,400-18,700 was lost. This area was vital as support due to several reasons. The first one is the immediate failure of the uptrend.
If Bitcoin’s price dropped below this support level, it means that the uptrend of flipping every previous resistance to support failed.
As the chart shows, the breakdown caused a downward chain reaction. This is the second reason, as losing that level triggered many stop/losses fueling the drop.
Previously, many traders likely anticipated a further up-move as the funding rates were favorable on most exchanges. This breakdown and the imminent chain reaction of stop/loss triggers are a typical outcome of a trend reversal.
Indeed, it’s quite common that market corrections don’t happen in a smooth manner. They are often vertical and painful. Staircase up, elevator down.
Total market cap likely to correct to $400 billion
The weekly chart of the total cryptocurrency market capitalization often shows a much clearer perspective.
In this manner, the total market cap reached the 1.618 Fibonacci level, where it hit resistance, similar to the $600 billion range.
More importantly, the total market cap established a new higher high and broke above the previous resistance zone at $400…