Three factors likely caused the rejection to occur include a sell-off on BitMEX, a major resistance level and the stock market pullback.
On Oct. 14, the Dow Jones Industrial Average (DJIA) dropped by 0.58%, after initially seeing a minor upsurge. As the trend of the U.S. stock market trend started to shift, Bitcoin recorded a sharp decline. Within 15 minutes, BTC saw a 1.15% drop from $11,518 to $11,370. According to the data from Skew, the correlation between Bitcoin and the S&P 500 has increased in recent weeks. In contrast, the realized correlation between BTC and gold has declined considerably in the last three weeks.
The data suggests that Bitcoin is currently perceived more as a risk-on asset over a safe-haven asset. Whether that leaves BTC vulnerable for a pullback amidst a stock market downturn in the fourth quarter remains to be seen after a strong Q3.
Some on-chain analysts spotted a spike in selling pressure coming from BitMEX, with major market shorts coming through. Before the initial drop from $11,540 to $11,280 occurred, many multi-million dollar short contracts appeared on BitMEX.
The $11,500 level has become a resistance area
The repeated rejection from the $11,500 area has turned it into a technical resistance level in the short term. Following the struggle of BTC to break above $11,500, traders have started to ponder the possibility of a drop below $10,900.
The confluence of repeated rejections from the same resistance level depicts a weakening short-term trend. But in the upcoming months, various on-chain data points suggest the likelihood of a strong market recovery.