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Analysts attribute today’s Bitcoin slump to ‘small weak hand test’

Analysts attribute today's Bitcoin slump to 'small weak hand test'

Cryptocurrency analysts view Bitcoin’s Thursday price drop as a silver lining. The drop has forced out weak hands and potentially opening the doors for Bitcoin’s sustainable rally to new highs.

On Wednesday, Bitcoin was unable to maintain gains above the $12,000 level which was the main resistance barrier. By press time, the asset is trading at $10,730. The huge price drop in 24 hours could be connected to the Bitcoin Whales, who might be dumping on the market.

Bitcoin’s last 24H chart. Tradingview.com image.

The drop in price can be interpreted as market weakness taking a toll on emotional traders. At the same time, market sentiment levels are worsening. Emotional traders have been triggered to sell the assets offering an opportunity to buy Bitcoin at a cheaper price before initiating a new rally. 

Strong breakout expected

With high funding, new investors have turned away from putting their money in Bitcoin. At the same time, existing Bitcoin holders are discouraged from boosting their long positions.

From a historical perspective, such scenarios usually result in a strong bearish breakout. Mostly, beginner investors who suddenly sell their assets are compelled to buy back their BTC at a higher price once whale traders launch a new rally.

Additionally, the cryptocurrency market usually shakes out weak hands with temporary price pullbacks after strong breakouts. The recent breakout was on Wednesday when Bitcoin traded at above $12,000. 

A stronger buying pressure might emerge, leading to a re-test of recent highs above $12,000. On Wednesday, analysts held the view that if Bitcoin maintains gains above $12,000 then hitting $15,000 will be in sight.

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