Assessing whether Bitcoin could slip below $20,000 as R&D intensifies
- Bitcoin experienced a week of significant selling pressure, after failing to hold the $30k range.
- Weekly selling pressure may ease with the fall in long liquidations.
Bitcoin [BTC] has been bearish after failing to hold bullish strength above $30,000. Some analysts predicted such an outcome and even predicted a significant pullback. But is a strong pullback below $20,000 likely if these predictions are correct?
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Here’s what we know so far based on recent data. The latest Glassnode alert revealed that the amount of Bitcoin supply active over the past two to three years just rose to a 2-year high.
This meant that many individuals holding BTC had started to move their coins. Such a result suggests that many of them may sell their coins in anticipation of higher selling pressure.
📈 #Bitcoin $BTC Supply Volume Last active 2y-3y (1d MA) just hit a 2-year high of 2,654,292,828 BTC
See calculation: pic.twitter.com/fsYCSFvLh8
— glassnode alerts (@glassnodealerts) 23 April 2023
The bearish expectations also reflected the current market situation. BTC has just ended a bearish week marked by whale currents.
Whales trimmed the balance since mid-April according to the addresses with balances equal to and greater than 1000 BTC.
Source: Glassnode
Meanwhile, long futures liquidations increased since mid-April, but fell from April 21. Why is this important? Well, the initial surge in liquidations may have driven more selling pressure as traders with leverage were forced to sell.
However, the decline in long liquidations indicated that the selling pressure could ease.
BTC exchange inflows have dominated compared to outflows since the middle of the month. Currency flows also increased, likely due to investors buying the decline. The flow rate for both has been decreasing for the past two days.
Source: Glassnode
Interestingly, the latest exchange flow data revealed that BTC exchange was slightly higher than inflow. This was a sign that demand was starting to outweigh the selling pressure. But does this reflect the price action?
BTC price action
Bitcoin’s press time price of $27,557 hovered above the 50-day moving average which can act as a psychological buy zone. But is a strong refutation possible at this point? Yes, but there is also the possibility of an extended disadvantage.
BTC has been trading within a support and resistance area. The latest pullback since mid-April came after price retested the ascending resistance line on the chart below.
Source: TradingView
How much is 1,10,100 BTC worth today?
So what should investors watch out for? A strong rise in demand above the 50-day moving average could signal a strong pullback. Weak demand may pave the way for extended sales pressure.
The second result may encourage more selling which will eventually push towards the rising support area. Such a result would lead to the next significant test of support near the $22,900 price range.
