Traders discuss what’s next for Bitcoin after abrupt 3% overnight drop

The price of Bitcoin (BTC) abruptly dropped on Sep. 29 from $10,950 to $10,630 overnight, recording a 3% drop. Following the rejection at $11,000, the sentiment of traders remains mixed.

Some are cautiously optimistic under the premise that BTC reclaims the $10,700 level. Technically, analysts say that the $10.7k area is a critical pivotal price point for Bitcoin in the near term.

Others say that the price trend of BTC has reversed in the short term after its rejection. The intense reaction of Bitcoin to a crucial resistance level at $11,000 presents a threat of a larger pullback.

Cautiously optimistic: what Bitcoin needs to do to recover

According to a pseudonymous trader known as “Byzantine General,” there are three key macro levels for Bitcoin.

The three levels are found at $10,700, $9,800, and $11,800, with $10.7k presenting a near-term roadblock for BTC. The trader said:

“10700 seems to be a key level. 9800 & 11800 are the closest 2 other important levels.”

If Bitcoin convincingly reclaims $10,700, it would raise the probability for a retest of $11,800 heading into October. A new monthly candle would open on Oct. 1, and a price spike with a market open could occur.

The price chart of Bitcoin with key levels. Source: Byzantine General

But if BTC fails to remain above $10,700, it would amplify the chances of seeing $9,800. That would also make the $9,600 CME gap retest highly likely if BTC were to reject $10,700.

The short-term bearish scenario

Another pseudonymous Bitcoin trader known as “Benjamin Blunts” foresees the “savage rejection” causing a larger correction.

He said that the recent rejection of Bitcoin at $10,950 tapped a critical Fibonacci level. In technical analysis, levels in the Fibonacci Sequence are considered pivotal areas for a potential trend reversal.

The trader said a drop below $10,000, possibly to the $9,600 to $9,800 support range, could happen. He said:

“Like clockwork, perfect tap of the 0.78 for BTC and savage rejection from it. expecting a new low below 9.5k from here, however am short ETH instead because I think it will fall more. make no mistake, this is a clear downtrend imo, back into mainly stables again.”

Atop the bearish rejection, on-chain indicators and network activity signal short-term bearishness. Researchers at Santiment said the address activity on the Bitcoin blockchain has been slowing. 

The number of active Bitcoin addresses drops. Source: Santiment

Declining fundamentals while the market uncertainty intensifies could cause heightened levels of selling pressure. The researchers said:

“Why is $BTC continuing to see drop-offs occur whenever we near $11k? Our DAA Divergence model indicates the network is seeing a severe lack of address activity. Today is the 5th most bearish output in the past 6 mths.”

Typically, on-chain indicators and metrics are medium to long-term signals, and they often do not accurately depict short-term price trends. Hence, in the near term, the price of Bitcoin would most likely depend on whether it retests $11,000 or risks falling to the low $10,000s.

However, other analysts are nevertheless seeing bullish signs. The difficulty hash ribbon indicator, for example, has been signaling a “buy zone” for Bitcoin, which buoys the medium-term bull case for BTC.