Bitcoin price is stuck between two key levels without any signs of directional bias. The critical support area, which prevented a steep correction, seems to weaken with each retest. However, the bulls confirmed that they will not give up the $39,000 zone immediately. While the BTC price is once again trading above $ 40 thousand, analysts think that after $ 45 thousand, ATH levels will be on the table again. Let’s look at the expectations of a few analysts who have this idea.
Bitcoin signals a crash to $30,000, weakening structural support
Bitcoin price is consolidating roughly between $45,000 and $35,000 and has been doing so for the past two months. The late January crash faced an equally strong buying pressure and resulted in a close above the $34,752 support level.
This level was crucial in preventing a steep correction to the downside. As BTC recovered from this collapse, it formed a demand zone ranging from $36,398 to $38,895. In the continuation of this phase, BTC saw impressive repulsive movements from the region. However, the appeal and strength of said support is waning as Bitcoin price tags this resistance for the third time. Therefore, a repeat of this support could open the way towards $34,752. A one-day close below this zone will be key in triggering a collapse to the $30,000 psychological barrier.
If Bitcoin breaches the $35,000 support
If such a scenario occurs, BTC will likely slide lower and rally the sell-stop liquidity below the $29,100 support level that served as a launch pad in July 2021. From a conservative perspective, the drop to $29,100 could serve as a capitulation move that marks a potential bottom. In this bear scenario, breaking the aforementioned level could push BTC to $23,000, which could be the second potential bottom.
IntoTheBlock’s Global Money In/Out (GIOM) model can be referenced to support the technical perspective for Bitcoin price. This index shows that roughly 5.06 million addresses bought around 2.45 million BTC at an average price of $23,251. Therefore, this area will be an important support level and extend from $11,443 to $36,754. A break of the $36,754 support level could be the key to a disastrous collapse to $30,000 or $23,251, according to analyst Akash Girimath. Interestingly, these levels are in perfect harmony with the technically mentioned obstacles.
A clear picture of potential collapse
As the name suggests, the indicator we mentioned in the above title has been used to determine the BTCs pending in wallets since it was purchased. Roughly 5.8 million BTC was lost, which is a relatively high number compared to the low point of the July 2021 crash. This structure shows that more investors are on hold and an unexpected crash could liquidate these owners and snowball to visit levels last seen in December 2020. Assuming this development happens, it could be the perfect setup for a capitulation crash.
Adding additional credibility to a steep correction is the Market Value to Realized Value Z-score (MVRV Z-score). This on-chain metric is used to assess whether a crypto is overvalued or undervalued, and it does this by dividing the difference between market capitalization and realized market value by the standard deviation of the market value.
Interpretation of the MVRV indicator
It takes the MVRV metric to a new level by identifying historical areas of fair value, oversold or overbought. The red band indicates overbought and is usually where the bull run stops and reverses. However, green value indicates oversold and is where long-term holders tend to accumulate. For BTC, its Z-score is 1.16, showing it has enough room to creep towards the green band. This move will require Bitcoin price to drop much below its current position, suggesting that the collapse is plausible and necessary for a bottom to occur.
Institutional investors are selling their BTC
On a similar note, cryptocoin.com Willy Woo, with whom we shared the analysis, stated that institutions and whales were selling and turned the scenario down. Woo adds:
There is no doubt that we are in a bear market because of the selling time. There has never been a bear market bottom in BTC without the capitulation event, so I think this zone is likely to break down and we test lower lows (LL) before accumulation occurs for the next bull cycle.
While all signs point to a bleak future for Bitcoin price, supply on exchanges seems to paint a promising picture, at least from an ultra-macro perspective. The number of BTC held in centralized institutions acts as a potential sell-side pressure; therefore, a bearish represents a bullish outlook. The BTC supply on such platforms has dropped from 2.69 million to 2.03 million as of May 19, 2021, adding another sense of relief for long-term holders.
The bearish thesis for BTC will be invalidated by a daily or weekly close above the $52,000 barrier. This move will create a higher top and pave the way for Bitcoin price to explore higher and revisit the psychological $60,000 level. With a sufficient increase in buying pressure, the leading crypto could form a new high at $80,000.
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