Bitcoin price expectations: Drop could reach $20,000 for this reason
Currently, Bitcoin's price is at a major support level in the $25,000 range, and technical analysis suggests that a drop to the next support level at $23,500 is possible if this level is breached.
Today’s Cryptocurrency analysis on behalf of Rania Gule Market Analyst at XS.com
Bitcoin prices are currently in an extremely volatile state, with the price still slightly above the weak support around the $25,000 region. A breach of this support could lead to a sharp decline in Bitcoin’s price against the US dollar. However, it doesn’t seem that the continuous uptrend since the beginning of 2020 has been broken yet. There’s a possibility that maintaining this level could result in an upward rebound, potentially leading to a breakthrough of resistance at $30,000.
To determine which of the above scenarios is stronger, we need to analyze historical data. Historically, low volatility and price consolidation often precede significant movements in the cryptocurrency market. This means that Bitcoin’s price could retest $20,000 before making another upward move.
In the historical price chart of Bitcoin, we can observe recurring patterns. During each sharp upward cycle, there’s a period of decline and sideways movement in the market (indicated by the red circles on the chart), especially when Bitcoin’s price falls below the new peak achieved. This area typically represents the final stage of a bear market. In each instance, Bitcoin’s price tests the overall cycle low.
Following this, we see a price reversal, with Bitcoin breaking above the previous peak (indicated by the green circles on the chart), initiating a long-term bullish trend. The only exception was in March 2020 when Bitcoin’s price also experienced a sharp decline due to the global spread of the coronavirus. After that, Bitcoin retested the previous peak in an upward move (indicated by the blue circle on the chart), which, in my opinion, is always an excellent buying opportunity.
Historical Chart of Bitcoin (BTC) Prices
Now, when we look at the current Bitcoin price movement, we see these similarities. Bitcoin’s price dropped below the peak it reached in June 2022, at around $46,404. Then the price oscillated around this level for a long period before prices surrendered due to the FTX exchange crash in November 2022. In contrast, Bitcoin’s price broke the bearish trend and started rebounding in January 2023, leading to a recovery and a retest of the price level near $30,000.
So, will the Bitcoin price retest the $20,000 level?
Currently, Bitcoin’s price is at a major support level in the $25,000 range, and technical analysis suggests that a drop to the next support level at $23,500 is possible if this level is breached. The chart also illustrates that if a scenario similar to what happened in March 2020 occurs, Bitcoin’s price could drop to below $20,000 in my opinion. If the Bitcoin cycle analysis above is correct, this would be an excellent buying opportunity in the medium and long term.
To clarify further, the sharp and strong price movement expected in the coming weeks could go in one of two directions. Either the price of Bitcoin will drop to test the price level near $20,000 in a bearish scenario, and this could be an excellent opportunity to enter the market and buy.
As for the bullish scenario, the first and most important resistance level that must be overcome is the $30,000 level, and if the price remains above it on the four-hour chart, we will have a strong bullish signal before the imminent Bitcoin network halving event in early 2024, although this scenario is the less likely one.