Crypto News

Bitcoin Price Climbs to $11,200, But Three Factors Hint at a Pullback

The price of Bitcoin spikes to $11,200 but three key factors suggest that a short-term pullback is likely as the BTC rally becomes overheated.

The price of Bitcoin (BTC) has increased from $10,995 to over $10,200 in the past 12 hours. But while the momentum of BTC also pushed up the price of other top cryptocurrencies, including Ether (ETH), key metrics and technical patterns suggest the chances of a pullback are rising. 

Cryptocurrency market snapshot July 31

Cryptocurrency market snapshot July 31. Source: Coin360

Three factors that hint at a drop are the fear and greed index, a potential Wyckoff pattern and major resistance.

The crypto market sentiment is at “greed,” data shows

According to data from Alternative.me’s Crypto Fear & Greed Index, the market sentiment is at greed. The index has hit 75 points, and every time the index reached a clear peak, Bitcoin corrected.

The Crypto Fear & Greed Index 1-year chart

The Crypto Fear & Greed Index 1-year chart. Source: Alternative.me

The last time the index reached a local top was in February 2020, when it reached 65 points. A month after, the price of Bitcoin dropped to as low as $3,596 on BitMEX.

Historical data shows that when the index hits a new high, BTC tends to pull back. But the way the market sentiment is measured is highly subjective. For instance, 30% of the index is composed of social media and surveys, which are non-quantifiable data. 

In a prolonged bull market, cryptocurrencies can stay overheated for an extended period, as seen in 2018 and 2019. As an example, the price of Bitcoin rose to as high as $14,000 in June 2019 before pulling back.

Bitcoin faces strong resistance

The price of Bitcoin corrected from the $11,200 to $11,400 range three times in the past three days. Metrics that suggest Bitcoin’s rally is overheated are insufficient on their own. But when combined with a relevant market structure, the argument for a bearish scenario could strengthen.

Historically, there has been lackluster resistance between $11,500 and $14,000. Hence, the chances that sellers would attempt to defend the $11,200 to $11,400 resistance range remain high.

When buyers break through the strong resistance area, the likelihood of bigger uptrend increases. Trader Michael van de Poppe explained that a breakout above $11,200 could trigger a rally to $11,700. He said:

“Crucial threshold is still the $11,200 level. Breaking through and $11,500-11,700 is next!”

Rafael Schultze-Kraft, the chief technical officer at Glassnode, raised a similar concern. Pinpointing historical BTC price cycles, he said:

“‘We will never see BTC below $10,000 again’, Episode 13. Last episode lasted one day.”

A potential Wyckoff formation and a head and shoulders pattern

Meanwhile, popular Bitcoin trader filbfilb suggests that BTC/USD may be forming a Wyckoff pattern, which typically results in a steep downtrend. Although the viability of the Wyckoff formation is contested, when combined with other metrics, the probability of a distribution phase rises.

A potential Wyckoff pattern forming on a lower time frame chart of Bitcoin

A potential Wyckoff pattern forming on a lower time frame chart of Bitcoin. Source: Filbfilb

One pseudonymous trader also noted that in the short-term, BTC faces a possible head and shoulders (H&S) formation. In technical analysis, the H&S pattern is a widely-recognized as a signal for a market top. The trader said:

“Everyone talking about BTC ripping higher when it’s painting the cleanest H&S in its history?”

The momentum of Bitcoin seems to be on the side of buyers, as it repeatedly tests a key resistance level. In the near-term, it faces strong resistance and two bearish patterns that might cause a downtrend.

Keep track of top crypto markets in real time here

How useful was this post?

Click on a star to rate it!

As you found this post useful...

Follow us on social media!

0 Comments
Inline Feedbacks
View all comments

Related Crypto News

Cointelegraph Consulting: Overwhelming bullish sentiment once again proves costly
Analysis of sentiment and on-chain data shows that a correction was likely to occur. Is there still room for...
Cypherpunk Holdings becomes 9th largest public holder of Bitcoin
Canadian holding company dumped XMR and ETH to fund its acquisition. Cypherpunk Holdings (CSE:HODL), a privacy-focused Canadian investment company,...
Bitcoin and blockchain topics to discuss with the crypto curious this Thanksgiving
Experts explain how to address common questions newcomers may have regarding bitcoin and the blockchain space. With Bitcoin’s (BTC)...
Spending Sats: A Look at This Year’s Bitcoin Black Friday Deals
Every year the shopping holiday called Black Friday allows consumers to get better deals on products and services. On...
Record $7.4B Bitcoin futures open interest shows pros still expect $20K BTC
Bitcoin price fell short of reaching $20,000, but record high open interest on BTC futures shows pros are still...
Garlinghouse: Ripple would still thrive even if XRP were declared a security
The CEO thinks his company will be just fine, even in this hypothetical scenario. Ripple CEO Brad Garlinghouse believes...

Featured Crypto News

Global search volume for Bitcoin appears higher than in 2017
Monthly global searches for Bitcoin are reportedly 350% higher than in late 2017. According to data collected by Brad...
Corporate Bitcoin frenzy: companies now hold $15.3 billion in BTC
Companies now hold over 842,000 BTC, which at the current Bitcoin price of $18,200, are worth $15.3 billion. As...
Ethereum Just Surpassed $500 For First Time Since 2018—Key Reasons Why
The price of Ethereum (ETH) hit $500 on Binance for the first time since July 2018. The timing of...
Charted: Litecoin Is Outperforming Major Altcoins, Why Dips Remain Attractive
Litecoin price is up over 10% and it broke the $80.00 resistance against the US Dollar. LTC is consolidating...
Bitcoin price doubles since the halving, with just 3.4M Bitcoin left for buyers
The Bitcoin price has doubled since the halving in May, with Chainalysis attributing much of the bullish price action...
TA: Bitcoin Prints Bullish Pattern, Why Close Above $18.2K Could Be Game Changer
Bitcoin price remained stable above the $17,500 support against the US Dollar. BTC is showing bullish signs and a...