Will $20,000 be the end of bull rally for BTC?

Will $20,000 be the end of bull rally for BTC?

  • Bitcoin
  • January 13, 2023
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  • Bitcoin price looks healthy and ready to retest one of the significant hurdles at $19,248. 
  • Network activity shows enthusiasm, but on-chain metrics reveal this move cannot sustain.
  • Two key levels to pay attention to include $19,248 to the upside and $15,443 to the downside.

Bitcoin price has reacted explosively to the release of the US Consumer Price Index (CPI) data for December, which has caused a whipsaw in BTC price. After things settled down, buyers won the tug of war, resulting in a minor upswing that is close to tagging a significant resistance level.

Bitcoin price, US CPI and long-term outlook

Bitcoin price dropped 2% after the US CPI numbers came in at 6.5%, matching expectations. As a result of the initial volatile correction, the recovery was fierce as BTC clocked in a 6.7% upswing in the next six hours. 

The three-day chart of Bitcoin remains the same, except this time around, the bullish divergence explained in previous publications has resulted in a 16% upswing so far. Any further uptick in buying pressure will push the largest crypto by market capitalization to retest the 2022 volume point of control at $19,248, which is the highest volume traded level.

The aforementioned level served as a support floor for Bitcoin price between June 21, 2022, to November 3, 2022, and it should be expected to act in the same way as resistance now. As Bitcoin price comes close to retesting this hurdle, investors should expect a spike in selling pressure and profit-taking.

A swift recovery above this blockade is highly unlikely without any significant news serving as a tailwind, especially considering that the larger outlook for BTC continues to be for it to continue in a downtrend. 

BTC/USDT 3-day chart

BTC/USDT 3-day chart

Supporting the recent uptick in Bitcoin price is the recent uptick in active addresses on January 10 from 769,000 to 943,000. This 22% growth in addresses has forecasted the potential rise in BTC. Going forward, if this on-chain metric continues to hold above 900,000 or hit 1 million, things could work in favor of bulls.

BTC 24-hour active addresses

BTC 24-hour active addresses

Although the recent uptick is just the start of the uptrend, it faces a significant hurdle at $19,248. Only if buyers can overcome this blockade will the bullish outlook continue. Failing to do so could result in a steep correction, which is much more likely to occur.

Taking a closer look at IntoTheBlock’s Global In/Out of the Money (GIOM) further solidifies the $19,000 to $20,000 resistance mentioned from a technical perspective. The GIOM notes that 3.67 million addresses that purchased nearly 2 million BTC are “Out of the Money” and are likely going to sell if Bitcoin price hits their cost price. This move could add more pressure to the upward thrust, either stalling or reversing the current trend.

Hence, investors should consider booking profits at or before $20,000. 

BTC GIOM

BTC GIOM

On a positive note

If Bitcoin price seizes the opportunity to flip the $19,248 to $20,000 barriers into a support structure, it will indicate the start of a new phase in the current rally. In such a case, market participants should keep a close watch on $25,000 and the range between $28,000 and $31,000.

Adding credence to the possibility of an uptrend is the supply distribution of BTC whales. In particular, the number of addresses holding between 100 to 10,000 BTC has surged from 15,670 to 16,000. This 2.1% accumulation from whales is already indicating a bullish outlook for the pioneer crypto. If these investors continue their buying spree, Bitcoin price could make its move above $20,000 and keep going.

BTC supply distribution by number of addresses

BTC supply distribution by number of addresses

All-in-all, short-term traders need to be careful of the big picture, at least until Bitcoin price either flips the $20,000 hurdle or gets rejected by it. Exercising patience at this significant level will provide traders an opportunity to position themselves in the right direction. 

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