Within the last hour Bitcoin (BTC) price dropped to $8,840. The drop came with less than 8 hours left before the weekly close.
A confluence of miners selling more BTC than they mine, Bitcoin recording 6 consecutive lower highs, and the retest of the $8,800 support leaves BTC vulnerable to a severe pullback.
Six consecutive lower highs since June 2019
As shown on the daily chart, since June 19 Bitcoin has recorded six consecutive lower highs. The price rejected at $14,000, $13,300, $12,300, $10,600, $10,500, and $10,000, making every local top lower than the previous peak.
In technical analysis, lower highs indicate that buyers are failing to establish a new bull cycle. Every time a lower peak is reached, it shows the selling pressure in the market is simply too strong to break out of it.
Bitcoin records six consecutive lower highs since June 2019. Source: Tradingview
A clear rejection of the $9,800 to $9,900 range and the projected third test of the $8,800 support level suggest Bitcoin is not ready to initiate a rally above $10,000 just yet.
Triple test of $8,800
The price of Bitcoin rebounded at $8,840, testing the $8,800 support area for the second time within four days. Typically, the digital asset tends to break down below a heavy level of support in the third or fourth touch. This means, BTC is likely to see a clean breach of $8,800 upon the weekly close.
Almost immediately after dropping close to $8,800, the price of Bitcoin rebounded to around $8,900, showing BTC is set for a short-term price spike following the weekly open on May 25.
But, data from TradingLite shared by cryptocurrency trader Hsaka shows a significant amount of sell orders on OKEx in the $9,300 to $9,400 range.
OKEx shows large sell orders at $9,300. Source: Hsaka
Based on the firm response of buyers at the $8,800 support level and selling pressure at $9,300, BTC is likely to remain in between the $8,800 to $9,300 range before seeing the next pullback.
If the price of Bitcoin rebounds in the short-term to the low-$9,000 region and revisits $8,800, the probability of BTC seeing a much larger correction to the $6,000 to $7,000 range increases.
Bitcoin miners are applying selling pressure
Bitcoin miners are continuing to sell more BTC than they mine. Such a trend is understandable given that the breakeven cost of mining BTC is above $12,000 following the May 11 halving.
The price of Bitcoin is nowhere close to $12,000 and this means miners will have to sell a portion of their existing supply to cover operational costs.
As cryptocurrency investor Willy Woo explained, there are two unmatched sellers in the Bitcoin market: miners and exchanges. Woo said:
There’s only two unmatched sell pressures on the market. (1) Miners who dilute the supply and sell onto the market, this is the hidden tax via monetary inflation. And (2) the exchanges who tax the traders and sell onto the market.
Bitcoin Miners Rolling Inventory Above 103%. Source: ByteTree
As shown by the chart above, the Miner’s Rolling Inventory (MRI) is above 103%, which means miners are spending more BTC than usual. This means the selling pressure coming from miners will continue to remain a threat to the recovery of BTC in the short-term.
