Assessing whether Bitcoin can slide below $20,000 as FUD intensifies

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Bitcoin had a week of significant selling pressure, after failing to hold the $30,000 range. Weekly selling pressure may ease as long liquidations decline.

Bitcoin [BTC] was bearish after failing to hold upside strength above $30,000. Some analysts anticipated such a result and even predicted a significant pullback. But is a sharp 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 that was active for the past two or three years just hit a 2-year high.

This meant that many people holding BTC had started moving their coins. Such a result suggests that many of them might sell their coins in anticipation of higher selling pressure.

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#Bitcoin $BTC Supply Amount Last 2y-3y activity (1d MA) just hit a 2yr high of 2,654,292.828 BTC

View metric: https://t.co/ov1FrjgNQz pic.twitter.com/fsYCSFvLh8

glassnode alerts (@glassnodealerts) April 23, 2023

Bearish expectations also reflected the current state of the market. BTC just wrapped up a bearish week characterized by whale outflows.

Whales had been chipping away at their balances since mid-April according to addresses with balances equal to and greater than 1,000 BTC.

Source: Glassnode

Meanwhile, long-term liquidations have increased since mid-April but decreased from April 21. Why is this important? Well, the initial spike in liquidations may have fueled increased selling pressure as leveraged traders were forced to sell.

However, the decline in long liquidations indicated that selling pressure may be easing.

BTC exchange inflows have dominated over outflows since the middle of the month. Currency outflows also increased, likely due to investors buying the dip. Throughput for both has slowed over the past two days.

Source: Glassnode

Interestingly, the latest exchange flow data revealed that BTC exchange outflows were slightly higher than inflows. It was a sign that demand was starting to outweigh the selling pressure. But does this reflect the price action?

BTC Price Action

Bitcoin’s price of $27,557 at press time hovered above its 50-day moving average, which may act as a psychological buy zone. But is a strong rebound possible at this stage? Yes, but so does the possibility of an extended decline.

BTC traded within a range of support and resistance. Its latest pullback since mid-April came after the price retested the rising resistance line shown in the chart below.

Source: Trading View

How much are 1,10,100 BTC worth today?

So what should investors be aware of? A strong resurgence in demand for the 50-day moving average could signal a strong rebound. Weak demand could set the stage for prolonged selling pressure.

The second result may encourage more selling, which will eventually push towards the ascending support range. Such an outcome would lead to the next significant test of support near the $22,900 price range.

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