Bitcoin Facing Major Resistance, Will $20K Hold or is Another Drop Coming? (BTC Price Analysis)

The market is currently attempting a recovery that might take the price up to $22K after being supported by the critical $18K level. However, there is significant resistance at around $20K. The bearish phase appears far from over as the substantial lack of demand in the market continues.

Technical Analysis

By Shayan

The Daily Chart

The descending multi-week trendline (currently at $20.5K) has been acting as significant resistance to the price for the past five months. Meanwhile, Bitcoin has seen some mild recovery and has reached the trendline for the fourth time. This particular level also aligns with the 50-day moving average (standing at $20.1K), which is a crucial resistance for the price.

Considering the overlap between the 50-day moving average and the trendline, BTC would face significant resistance at $21K. It must be breached in order to retest the $25K primary resistance level.

However, when reviewing the market sentiment and decreased momentum, the price seems more likely to get rejected from this crucial point and experience another drop.

Source: TradingView

The 4-Hour Chart

As stated, Bitcoin is trapped in a consolidation zone between the $18K support level and the substantial resistance at $25K. Meanwhile, the cryptocurrency has initiated a rally towards the descending wedge’s upper trendline.

However, Bitcoin is forming a potential double-top pattern, a well-known bearish pattern. If the neckline is broken, Bitcoin could experience a fall to the $18K level again. Considering the power of the $20K-$21K range and the formation of this double-top pattern, the price will likely fail to surpass the trendline and plunge towards lower price levels.

Source: TradingView

On-chain Analysis

By: Edris

Bitcoin Net Unrealized Profit/Loss

Bitcoin’s gruesome downtrend is pushing more and more holders underwater, as a very large number of investors are still holding on to their coins at a loss.

This psychological and financial pressure could force many hands to sell their assets at these low prices in order to prevent harsher losses. This would create an ideal scenario for smart money to accumulate Bitcoin at cheap prices and in large amounts. That is the reason bear market bottoms form, where the majority of the market participants are at a loss.

The NUPL metric is one of the key indicators to evaluate the unrealized profits and losses of the investors and could be useful to determine the potential price range for the bottom to form. According to the chart, NUPL is currently in a zone where previous bear market bottoms formed.

The price could still drop deeper, but the NUPL metric is suggesting that the bottom could be close.

Source: TradingView

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Cryptocurrency charts by TradingView.

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