Why The Bitcoin Price May Be Ready To Return To $20,000

Crypto News
4 Min Read

- Advertisement -

Bitcoin price managed to close yesterday’s daily candle above critical support, giving bulls a fighting chance to avoid further declines. However, today’s trading session was in favor of the bears, with BTC dropping below the $19,000 area.

At the time of writing, Bitcoin stands at $18,900, with a loss of 1% in 24 hours and a loss of 2.4% in one week. Other cryptocurrencies in the crypto top 10 by market capitalization follow a similar trend, except for Cardano and Solana. These cryptocurrencies are posting heavy losses across the board.

Bitcoin price BTC BTCUSDT
The price of BTC is moving sideways on the 4-hour chart. Source: BTCUSDT trading overview

Bitcoin Price Takes Down Liquidity

Last week, Bitcoin price reacted negatively to the September Consumer Price Index (CPI) print published by the US government. This statistic is one of the benchmarks for inflation, and the September printout pointed to higher levels.

In turn, the US Federal Reserve (Fed) will tighten monetary conditions in world markets. This policy will continue to hedge any bullish momentum for Bitcoin and risky assets, including those in legacy markets.

This response to higher inflation and an aggressive Fed led Bitcoin price to hit its annual low again near $17,600 when the September CPI print was released. The crash was short lived as BTC recovered to the $19,000 high area.

During the flash crash, many traders opened long positions as BTC recovered. These traders were expecting a higher move, and their leveraged positions were letting a lot of liquidity down. According to analyst Justin Bennett, Bitcoin price is taking that liquidity before resuming its bullish momentum.

Bennett pointed out that BTC moves in a tight range between $18,600 and about $19,800. The cryptocurrency may return to those levels before attempting another breakthrough of critical resistance near the $20,000 area. the analyst said the following while dividing the chart below:

This has been my plan for $BTC all week. It was a combination of last Thursday’s long lower pit partially filled + the mid $18k liquidity gap + channel support.

Bitcoin Price BTC BTCUSDT Chart 2
BTC’s price takes liquidity at $18,600 and goes to $19,800. Source: Justin Bennett via Twitter

Bitcoin shows signs of capitulation

At the time of writing, Bitcoin price appears to be following this trajectory. The cryptocurrency is back in range and could aim for the top of the channel.

On higher time frames, Bennett said while $18,700 is on the daily chart, Bitcoin could gain momentum to push towards the central area in the $20,000 region before turning a new leg lower.

Data from research firm Santiment indicates that Bitcoin is showing signs of capitulation. Many believe that BTC holders have capitulated en masse in recent months, making this long period of consolidation a painful step to take the next step up.

Share this Article
Leave a review

Leave a review

Your email address will not be published. Required fields are marked *

adbanner