BTC continues to maintain its boring mode, with the daily chart resembling a repetition of the previous 10 days of sideways movement. One of the two frustrating characteristics of bear markets is the dead price. Volumes have diminished to the point where it is difficult to find any significant volume except for the top 10 altcoins on the Binance exchange. This reminds us of the most frustrating days of previous bear markets. So when will the bad days be over? Or are worse days awaiting us?
Will Bitcoin Reach $20,000?
If this happens, the price will almost go back to where it started the year, making the past 9 months a wasted time for investors. Bitcoin is currently in a very precarious position. The price movement is hovering just above the fragile support level of $25,000. Losing this level could trigger a much larger series of losses.
On the other hand, the uptrend that has been in place since the beginning of 2023 does not appear to be broken. If this level can be held, there is a chance for a new rally, targeting the break of the $30,000 resistance.
According to on-chain readings, both scenarios seem possible. The realized price and historically low volatility indicate that a major move is approaching in the cryptocurrency market. The price of BTC could retest $20,000.
Will Cryptocurrencies Fall?
The realized price of Bitcoin is an indicator that divides the realized market capitalization by the current supply. In contrast, the realized capitalization evaluates different parts of the supply at different prices. Specifically, this metric calculates the value of each UTXO based on the price at which it last moved. We see cyclical similarities in the long-term chart of the realized price against the daily BTC price movement. First, in each cycle, the period of market capitulation began when the BTC price fell below the realized price (red circles).
At the same time, this was always the final stage of a bear market, and each time the Bitcoin price formed the macro bottom of the realized price. Then the opposite happened and the price surpassed the realized price.
The only exception to this was in March 2020 when the BTC price sharply dropped due to the global market crash caused by COVID-19. Afterwards, the largest cryptocurrency retested the rise of the realized price (blue circle), revealing that it was a great buying opportunity period.
Looking at the events in the current cycle, we see these similarities. Bitcoin fell below the realized price in June 2022. It then lingered around this line for a long time before succumbing to the collapse of the FTX exchange in November 2022. In contrast, BTC broke the downtrend in early January 2023 and initiated a rally. This led to a recovery and a quick retest of the realized price line.
So what will happen next? Technical readings suggest a possible drop to $23,500. Based on the realized price chart mentioned above, this and below are possible. Bitcoin is currently experiencing historically low volatility during this time period. The Bollinger Bands in which the BTC price moves are the narrowest in the entire history of Bitcoin today.
After such a period of consolidation, there is always an expectation of a sharp movement and an increase in volatility. However, it is not possible to predict the direction of this increase. In the bearish scenario, $20,000 and below are likely, while in the opposite scenario, $30,000 and above are possible. What is certain is that based on historical data, the price seems to be heading towards one of these extremes.
