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

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

by Lottar

The Bitcoin price managed to close yesterday’s daily candle above critical support, giving bulls a chance to avoid further downside. However, today’s trading session favored the bears, with BTC moving 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 Cardano and Solana. These cryptocurrencies are recording huge losses across the board.

BTC’s price is moving sideways on the 4-hour chart. Source: BTCUSDT Tradingview

Bitcoin price takes downward liquidity

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

In turn, the US Federal Reserve (Fed) will tighten the monetary conditions of global markets. This policy will continue to limit any bullish momentum for Bitcoin and risk-on assets, including those in legacy markets.

This response to higher inflation, and a hawkish Fed, saw the Bitcoin price revisit its annual lows near $17,600 when the September CPI print was published. The crash was short-lived as BTC returned to the high $19,000s area.

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

Bennett pointed out that BTC is moving in a tight range between $18,600 and around $19,800. The cryptocurrency could return to those levels before attempting another break of critical resistance near the $20,000 area. The analyst said the following while sharing the chart below:

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

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

Bitcoin is showing signs of capitulation

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

On higher time frames, Bennett said that while $18,700 remains on the daily chart, Bitcoin may be gaining momentum to push into the central area in the $20,000 region before making a new leg lower.

Data from research firm Santiment suggests 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 the next move to the upside.

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