- Bitcoin showed signs of consolidation coming to an end, but demand remained low.
- BTC’s price action suggested that a crash to $28,000 could still be on the agenda.
If you have been keeping a close eye on Bitcoin [BTC], then you may have noticed consolidation in the past four weeks. Recent findings suggested that the cryptocurrency was about to break out of its consolidation zone.
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According to Twitter account Woonomic, Bitcoin could be moving towards the end of its consolidation phase. The claim is based on rising demand for futures, which is in an uptrend even though Bitcoin’s price action was sideways.
This suggests that there is currently a bullish bias, especially in the derivatives segment.
Early signs that BTC consolidation is nearing completion (FSI chart below).
Demand for futures is currently moving the market, this demand has risen against sideways price action (this is bullish).
Volatility dynamics signaling a larger move as well is likely. pic.twitter.com/WkmiQO0B17
— Willy Woo (@woonomic) July 20, 2023
The same findings suggest that the market is about to experience a resurgence in volatility. But is Bitcoin experiencing strong demand in the derivatives segment?
Well, Bitcoin’s Open Interest has fallen significantly over the past four weeks. Similarly, Bitcoin funding rates dropped significantly over the same period.
Source: CryptoQuant
These findings are likely due to the low volatility during the final consolidation phase. This confirmed that the demand was not quite there yet. If the upbeat expectations come true, we are likely to see a surge in demand for BTC this weekend and maybe even next week.
Will Bitcoin Bears Dominate?
BTC price action has shown some selling pressure since mid-July. This suggests that there is still a chance that contrary to expectations it will experience more selling pressure. Such an outcome could push the price back to the rising support level.
This means we could see another unexpected dip below $28,000.
Source: TradingView
So far, we have witnessed some weakness in Bitcoin’s price action below the $30,000 range. This outcome could wipe out some investor confidence, potentially leading to more downside effects.
On the other hand, the MFI indicates that liquidity is gradually flowing back to Bitcoin. The RSI is also perfectly positioned for a potential recovery at the 50% level.
A look at Bitcoin stats offers a little insight into the state of BTC. Ultimately, Bitcoin’s fate rests in the hands of addresses with large balances: whales. Addresses with more than 1000 BTC have had their balances reduced since July 13.
Source: Glassnode
Read Bitcoin [BTC] Price Forecast 2023-24
Despite the slight outflow, the same measure indicates whale levels are still remarkably high, especially compared to the lowest levels in June.
This again indicates that selling pressure is currently low. As such, the final outcome may still be a toss-up. But that outcome could swing to the bullish side, thanks to institutional demand.
