This week Bitcoin (BTC) price has struggled to overcome resistance at $9,600 and at the time of writing the top-ranked cryptocurrency on CoinMarketCap is finding support near $9,400.
Crypto market daily performance. Source: Coin360
Technical analysis shows there is a strong support level at $9,270 and if Bitcoin price drops below it a steep pullback could occur.
To many traders the $9,000 and $9,270 levels are considered as the last lines of defence for buyers, and protecting these levels is critical to prevent another price decline to the $8,000s.
What’s next if $9,270 breaks?
In the last 24 hours, the price of Bitcoin attempted to break below $9,270 in a rapid sell-off from $9,400 to $9,240. Immediately after it hit $9,240, BTC bounced strongly to as high as $9,450.
XBT-USD range since June 12 with $9,270 acting as a strong support level. Source: TradingView.com
Bitcoin has essentially been in the same range since June 11, with the $9,200 range acting as a support area. BTC dropped to the $9,000 level once in the past eight days, demonstrating relatively low volatility compared to May.
The lack of volatility since early June can be attributed to the strength of buyers at $9,270. Sellers are trying to take BTC back to the $8,000s but data shows bulls are defending the $9,000 to $9,200 with large orders primarily on BitMEX and OKEx.
On June 18, Bitcoin trader Edward Morra wrote that $40 million worth of limit orders were filed between $9,270 and $9,350 on BitMEX alone. The trader said:
“More than $40M stacked in limit orders around $9,350 - $9,270 on Bitmex. Don't seem to be pulled for now, quite an effort needed from bears to push through it.”
The abundance of buy orders in the low-$9,000 region caused BTC to recover quickly as soon as it reached $9,000 or $9,200 in the past several days but support levels can weaken after multiple retests in a short period of time.
If the $9,000 to $9,270 range breaks down, traders anticipate a steep pullback to occur in the Bitcoin market.
Cryptocurrency trader Satoshi Flipper noted that the breakdown below the $9,200 support can cause a drop to the $8,600 to $8,700 support range in the near-term.
BTC/USDT 4-hour chart. Source: TradingView.com
Open interest is building at futures exchanges
BTC futures open interest. Source: Skew
Open interest at multiple futures exchanges is also rising as $930 million in BTC options are expected to expire on June 26. BitMEX, in particular, saw its open interest stabilize above $600 million.
This is important because when open interest reaches record levels the probability of a long or short squeeze increases in the short-term.
Thus, the market is currently at a point where traders anticipate a large price movement from Bitcoin and the upcoming $930 million BTC options expiry re-enforces the likelihood that Bitcoin price will see increased volatility over the coming week.
Bitcoin daily price chart. Source: Coin360
The overall cryptocurrency market cap now stands at $265.7 billion and Bitcoin’s dominance rate is 65%.