3 Reasons Why Bitcoin Price Saw Strong Rejection Near $20,000

Bitcoin (BTC) has finally managed to secure a new all-time high, but the digital asset has faced a strong rejection near $20,000. On-chain analysts say that selling from whales and miners, coupled with the $20,000 level acting as resistance, caused the fierce decline.

BTC/USD 15-minute chart. Source: TradingView

What drives whales and miners to sell Bitcoin?

For whales and high net worth investors, liquidity is the most important factor. Since they are dealing with large orders, they need to calculate the slippage that their sell orders will cause.

Typically, the best time for whales to sell is when there is a peak in excitement in the market and there is a lot of buyer demand. This allows whales to sell their Bitcoin holdings more efficiently without causing huge volatility.

When the price of Bitcoin officially surpassed its all-time high on Coinbase, market sentiment turned highly bullish. Shortly thereafter, whales began selling, leading to massive liquidations on major exchanges.

Ki Young Ju, CEO of CryptoQuant, explained that whale withdrawals were slowing on November 30. He said: "Based on miner selling, exchange whale activity, and no whale withdrawals, I call short-term bearish. But I know enough exchange stablecoin reserves to break $20,000 this year. If ATH rejection occurs, there may be a huge pullback as whales sell BTC in large quantities."

Whales are keeping BTC on exchanges, which means higher selling pressure, and miners’ selling amplifies BTC’s decline.

Ki also noted that whales have started depositing BTC into exchanges again, which happens when whales want to sell their BTC holdings.

Is the current recovery just a dead cat bounce?

BTC’s price quickly recovered after falling to around $18,200, rushing back above $19,400 within hours.

The quick recovery most likely occurred due to the nature of the drop. As the price dropped, there was a cascade of long liquidations on exchanges. As a result, BTC would have likely fallen further than it would have if it weren’t for the massive liquidations.

For this reason, the strength of the recovery is also to the upside. Late-stage shorts may become aggressive as BTC declines, leading to a short-term short squeeze.

There are two main scenarios that could play out for Bitcoin in the short term. First, it could consolidate above $19,000, which would allow the derivatives market to find some calm and open interest to rebuild.

Second, BTC could continue to fall as traders anticipate a blowout top after reaching its all-time high.

But the macro outlook for Bitcoin remains highly optimistic. Cryptocurrency trader Scott Melker emphasized that the November monthly candle closed at BTC's all-time high, which paints a positive long-term picture for BTC. He said: "Last month's close happened to be the previous all-time high monthly candle close. This month closed exactly at the all-time high. It's really an impeccable chart."

In the short term, the key support levels for Bitcoin are $18,200, $17,700, and $16,200. These areas still have large whale groups and may cause buyers to react.