As Bitcoin (BTC) consolidates above a key support level, investors are waiting to see the direction the big crypto will take. The technical set up and on-chain metrics point to a stiff barrier ahead with a possibility of a 10% retracement before BTC continues its upward journey.
Bitcoin Price Bulls Frustrated By the $32,000 Level
BTC price is at an inflection point as it trades within a major supplier congestion zone stretching from $30,000 to $32,000. Note that this is a very significant resistance zone which has rejected the Bitcoin price twice in the recent past.
After the may 2022 crypto crash, Bitcoin bulls tried to recoup their losses when they staged a recovery in mid-May. The price was turned down after reaching a high of $32,385, plummeting 45% to set a swing low at $17,550.
The most recent incident when this level proved hard to break for bulls when in April when the price dropped 20% from a high of $31,050 to $24,738.
From this trend, it show that every time the BTC drops from this level, it drops half the percentage it dropped in the past. This means that more investors buy on the resulting dips, hence creating strong demand ones on the upside.
As such, the current setup points to a 10% drop if Bitcoin is rejected from the same zone. At the time of writing Bitcoin was exchanging hands at $30,121 and was sitting on immediate support at $30,000. A daily candlestick below this level would see BTC drop toward the $28,000 defense zone where the 100- and 50-day Simple Moving Averages (SMAs) appear to merge. This where BTC’s downside could be capped for the time being.
BTC/USD Daily Chart
Supporting Bitcoin’s downside was the appearance of three red candlesticks at the end of the chart as shown above. In addition, the Moving Average Convergence Divergence (MACD) indicator was facing downwards with the recent call to sell Bitcoin still in play. This happened on June 6 when the MACD line (blue) crossed below the signal line (orange), suggesting that the market sentiment had flipped bearish.
Also supporting the bearish forecast is the robust resistance the price faced on the upside. According to data from IntoTheBlock, the major resistance between $30,000 and $32,000 is frustrating the bulls efforts to scale the price higher.
According to its In/Out of the Money Around Price (IOMAP) model, the area between $30,133 and $31,010 is within this supply zone where 1.04 million BTC were previiulsy bought by 2.21 million addresses.
Any attempts to push the price above this level would be met by intense selling from this cohort of investors who would wish to breakeven.
Bitcoin IOMAP Chart
The same IOMAP showed hat 61.79% of BTC HODLers are in profit at the current price. If these investors grow impatient of waiting for the price to rise, they might decide to take their profits at the current level, causing the price to drop.
On the other hand, the IOMAP shows that apart from the said demand zone, BTC sits on relatively strong support. Shattering the barrier at $31,000 would confirm a break out toward $32,000.
Overcing this barrier would confirm a bullish breakout for Bitcoin with the next logical move being a climb to $35,000 and later $40,000
