Analyst Predicts Bitcoin Faces Resistance but Uptrend Remains Strong

In early December, Bitcoin experienced a drop attributed to algorithmic trading, thin liquidity, and a retest of a critical resistance zone. Analyst Michaël van de Poppe views this decline as a normal market reset rather than a change in the overall trend, anticipating a potential retest of resistance levels in the near future.

Key Takeaways

Bitcoin's recent price drop aligns with typical market behavior at the beginning of the month.
The decline is linked to algorithmic trading resets, decreased liquidity, and resistance zone rejections.
Van de Poppe perceives this movement as a routine consolidation rather than a sign of weakness.
A successful breach of previous resistance may lead to further price increases.

Bitcoin price chart showing early-December drop from resistance zone

Bitcoin Price Movement Analysis

As December commenced, Bitcoin's price experienced a downturn that fits a recognizable market pattern rather than indicating a significant shift in the general trend, according to crypto analyst Michaël van de Poppe. He characterized this development as a standard reset amid ongoing price consolidation.

Bitcoin’s notable price drop at the start of the month can be attributed to several factors. Van de Poppe pointed out that when a new month begins, algorithmic trading systems are often activated, leading to short-term selling pressure and decreased liquidity.

Bitcoin

According to van de Poppe, the current liquidity situation remains limited, primarily due to a significant washout event on October 10, which led to considerable losses for many market makers who subsequently reduced their trading activity. With fewer liquidity providers available, even minor sell orders can exert a more considerable downward impact on Bitcoin's price.

The cryptocurrency was turned away from a vital resistance zone, reinforcing a consolidation phase that has developed over several weeks. Data indicate that Bitcoin consistently interacted with this resistance level but was unable to break through, resulting in a capped price range that contributed to the current downward trend.

TradingView data depicts a sharp decline from a recent local peak, followed by a liquidity sweep below the established lower range and a slight recovery. This graphical representation supports van de Poppe’s observation that algorithmic trading may instigate early-month downturns, with market makers struggling to stabilize prices during periods of low liquidity. However, buyers appear to be re-entering the market near the lower range, preventing a more significant breakdown.

Looking ahead, van de Poppe anticipates that Bitcoin will attempt to retest the same resistance level within a week or two. If the market manages to overcome this ceiling in its next attempt, he believes this could trigger an upward movement toward higher price levels.

In conclusion, van de Poppe reassures that Bitcoin remains in a consolidation phase, asserting that the current price drop signifies a typical reset within a market still gaining momentum rather than a warning sign of weakness.