On August 28, the bitcoin price abruptly crashed from $10,200 to $9,500 on major cryptocurrency exchanges including BitMEX, recording a staggering 7 percent drop within a span of minutes.
The drop occurred hours before the weekly close of the BitMEX perpetual contract, which reflects the price of bitcoin on major spot exchanges.
Most analysts have attributed the drop to the close of the CME bitcoin futures contract, which previously has marked several pullbacks for the dominant cryptocurrency.
Bitcoin price has been vulnerable for most of August
Since early August, the bitcoin price has tested the $9,800 to $10,200 support range more than six times in a three-week span, demonstrating short term weakness.
As noted by the Skew research team, possibly due to the lack of volume in the market, the CME bitcoin futures market has also shown little interest from institutions.
"~50% of total open interest set to expire this week at CME. Some of those positions will be rolled but overall institutional investors have been looking elsewhere in August," the Skew team said.
Earlier this week, CCN reported that technical analysts foresee $8,000 as a potential target for bitcoin in the short term. Some analysts said that there exists strong support in the low $8,000 region and a weekly close below $10,000 could lead the asset toward lower supports.
"The price compression is reducing gains from swing lows to swing highs: 86%, 36% and recently only 15%. Wanting price to keep closing above $10,025. Large gap in VPVR (supply/demand and areas by price) and if the price breaks down, lots of interest right below $8,000," Josh Rager said.
What's next for the crypto market?
With bitcoin's likelihood to close below $10,000 on the weekly and possibly on the monthly chart, analysts anticipate the asset to dip to strong support levels in the $7,000 to $8,000 range.
Click here for a real-time bitcoin price chart.