Bitcoin declined by 2.5% in three hours. Why?

On December 15, the world’s dominant cryptocurrency price, Bitcoin, increased over $19,500 briefly and hit $19,570 on Binance. However, in three hours, BTC suddenly declined by 2.5% and settled at $19,050.

The dominant cryptocurrency spiked to about $19,600 from the momentum of its relief rally and negative futures market funding rates.

On December 12, Cointelegraph announced that technical indicators revealed Bitcoin was oversold after declining below $17,600.

Furthermore, the four-hour candle chart witnessed a bullish divergence and a TD9 buy indicator. It indicated exhaustion of selling pressure.

Additionally, the digital currency’s price quickly rebounded above $18,000 and resumed its run past $18,300.

Buoyed by the relief rally, BTC resumed soaring, eventually rising to as high as $19,570 across other leading exchanges.

Furthermore, the futures funding rates across Binance Futures and other significant platforms became negative as Bitcoin started to rebound over $18,000.

The funding rate of Bitcoin futures contracts becomes negative when the number of short-sellers is more than buyers. It indicates the possibility of a short squeeze raises, which could cause buyer demand to spike swiftly.

The funding rate was negative for a short time. However, since BTC’s funding rate rarely becomes negative, it was symbolic of aggressive selling.

According to a pseudonymous trader, Byzantine General, short-sellers were highly aggressive during the relief rally. He said that a move over $19,300 would squeeze many shorts.

As soon as BTC exceeded $19,300, it swiftly moved forward to $19,570. The change hints that a large short squeeze happened.

Notwithstanding the strong rebound, the dominant cryptocurrency then witnessed a large sell-off above $19,500 as whales took profits.

Bitcoin may hit $20,000 before Christmas

On December 15, the CEO of CryptoQuant, Ki-Young Ju, announced that he is decreasing his position due to the rise in whale deposits to exchanges.

After which, BTC has declined back below $19,100, consolidating under the $19,400 resistance area once again.

In the near term, the key for BTC is to remain above the $18,800 support level. According to Cointelegraph, this level holding would be a bullish sign that may propel Bitcoin to have another go at new lifetime highs.

According to Ryan Selkis, the chief executive of Bitcoin and Cryptocurrency data company Messari, Bitcoin will hit $20,000 before Christmas. He is confident the market will shrug off the regulation proposal from U.S. Secretary of the Treasury Mnuchin, and MicroStrategy’s enormous BTC bet will keep the rally going.