- Bitcoin’s price is fluctuating within a range rarely seen in its historical data.
- We may soon witness Bitcoin’s price either dropping below $20,000 or soaring above $30,000.
- The current low volatility is unlikely to persist for long.
Delving into Bitcoin’s current price trends and predicting potential future movements.
Is Bitcoin Heading Towards $20,000?
Should Bitcoin’s price drop to $20,000, it would essentially revert to its value at the start of the year, rendering the past nine months a period of stagnation for investors. Bitcoin is currently in a precarious position, with its price hovering just above the fragile support region of $25,000. If this support is lost, a significant price drop could ensue.
However, the upward trend that began in early 2023 doesn’t appear to be broken. If this level can be maintained, there’s a chance for a price rebound, potentially targeting the resistance at $30,000. According to on-chain readings, both scenarios are plausible. The current price and historically low volatility indicate that a significant movement in the cryptocurrency market is imminent, with Bitcoin’s price potentially retesting $20,000.
Are Cryptocurrencies on a Downward Trend?
Bitcoin’s realized price, which is the realized market capitalization divided by the current supply, values different parts of the supply at different prices. Specifically, this metric is calculated by assigning value to each UTXO based on the price at which it last moved. In the long-term graph of the realized price versus daily BTC price movement, we see cyclical similarities.
Each cycle has begun with a market capitulation period when the BTC price fell below the realized price. This has always marked the final stage of a bear market, with each instance forming the macro bottom of the full cycle. Subsequently, the price would rise above the realized price.
The only exception to this was in March 2020, when the BTC price sharply dropped due to the COVID-19 crash in global markets. The largest cryptocurrency then retested the rise in the realized price, which turned out to be a significant buying opportunity.
Looking at the events in the current cycle, we see these similarities. Bitcoin fell below the realized price in June 2022 and hovered around this line for a long time before capitulating with the crash of the FTX exchange in November 2022. In contrast, as early as January 2023, BTC broke the downtrend and initiated a bounce, leading to a recovery and a rapid retest of the realized price line.
Technical readings suggest a possible drop to $23,500. According to the realized price graph mentioned earlier, this and even lower is possible. For the first time in its history, Bitcoin is experiencing such low volatility during this timeframe. The Bollinger Bands within which the BTC price is moving are currently the narrowest they’ve ever been in Bitcoin’s history.
After such a period of compression, a sharp movement and increase in volatility should be expected. However, it’s impossible to predict the direction of this increase. In a bearish scenario, $20,000 and below is possible, while in a bullish scenario, $30,000 and above is likely. One thing is certain: according to historical data, it seems likely that the price will run towards one of these extremes.
Conclusion
Investors should be aware that the information in this article does not constitute investment advice. Cryptocurrencies carry high volatility and thus risk. Investors should conduct their own research and make transactions accordingly.
