Bitcoin price might be in for a major correction

Bitcoin price is unpredictable and highly volatile during the best of times, and 2020 certainly did not make it any easier so far. Apart from its usual volatility, the coin had to figure out how to perform in the world-wide pandemic. Not to mention that its third halving is just about to arrive in less than a month, now.

All of this is very confusing for everyone involved with the crypto industry, including miners, traders, investors, and more. The coin recently struggled with a shift of drops and rallies, and the most recent move it made was a surge back above the $7k mark.

As per recent reports, a surge in buyers have arrived. If you’re new to the scene, read up on how to invest in bitcoin.

BTC price stuck in a tight spot

For the past 36 hours, it fluctuated in the $6.900 and $7,100 range. Right now, it sits at $7,150, possibly planning to try and test a resistance at $7,200.

Historically, whenever BTC found itself in such a tight range for a long period of time, a major price movement followed. However, that price movement is not always a positive one, and sometimes, BTC might just as easily sink.

In fact, this might be such a scenario, as three different technical factors indicate that a drop will soon come.

Three signs of Bitcoin’s approaching price drop

The first one is the deviation from the descending trendline. Basically, whenever BTC price strays from the descending trendline, this acts as a suggestion of a bearish retest of low supports. With BTC price breaking the trendline to go after $7.2k mark, this is a textbook example of such behavior.

The second one is the emergence of a fractal that resembles the 2019 top. BTC experienced signs of a local top at $10,500 back in February, before coronavirus caused a global economic meltdown.

The coin’s price rejected a multi-year resistance level, and it quickly sank, first to $7,700, and then to $3,650. One crypto analyst, Crypto Capo, noted that this behavior is very similar to the last one that knocked down the price to $3,000s.

The third and last indicator is a growing supply of Tether. Over the last few weeks, Tether supply grew by $2 billion, while its market cap exceeded $6.3 billion. This indicates a major demand for stablecoins, which act as a safety net for investors.

Whenever investors expect a major drop, they move their funds into a more stable form. With USDT being the largest and most popular stablecoin around, many have opted to buy it instead of BTC.