2023-05-20 01:32:13
© Reuters. Are Bitcoin Bulls Ready to Break $27,000?
BeInCrypto – (BTC) volatility has increased this week, with bulls making multiple attempts to break the critical $27,500 resistance. While broader macroeconomic conditions remain uncertain, on-chain data is displaying several green signals for a positive BTC forecast.
This week, Bitcoin’s large transaction count rebounded after the BRC-20 Ordinals triggered a hike in fees. With Bitcoin Supply on Exchanges now at 60-day lows, see how the bulls could reverse the BTC trend in the coming days.
Big transactions are back on the Bitcoin network
Last week, a sudden increase in gas rates caused by the BRC-20 Ordinals has investors turning to alternatives such as peer-to-peer transactions. The bearish trend in large transactions contributed to BTC’s recent pullback below $26,000.
However, the controversy has cooled this week as on-chain data shows a resurgence in the volume of large transactions on the Bitcoin network.
The graph below shows how BTC transactions greater than $100,000 increased by 51%, from 10,420 on May 14th to 15,750 transactions recorded on May 18th.
Bitcoin (BTC) Price Prediction – Large Transactions. May 2023. Source: IntoTheBlock
The Large Transaction metric measures the activity of whales in a net, tracking daily transactions greater than $100,000.
Due to the pressure of demand and the liquidity they provide, these whale transactions are critical to a cryptocurrency’s prospects.
As the whales return to the Bitcoin network, the bulls could gain greater momentum to challenge the $27,000 resistance.
Investors Are Moving Coins Off Exchanges
At the end of May 18, 2023, the Bitcoin Balance on Exchanges was at 2.3 million BTC. According to on-chain historical data from Glassnode, this is the lowest since mid-March 2023.
The Supply on Exchanges metric measures the number of Bitcoin currently deposited on recognized exchange wallets.
The orange line in the chart below shows how the BTC balance number on exchanges went into a sharp decline as the price dropped below $27,000 on May 14.
Since then, Bitcoin investors have withdrawn 240,000 coins from exchanges.
Bitcoin (BTC) Price Prediction – Balance on Exchanges – May 2023. Source: Glassnode
Usually, when the balance of a cryptocurrency available on exchanges decreases considerably, this causes a relative shortage in the markets. This relative scarcity usually triggers a price increase.
Interestingly, the FX supply () also dropped to an all-time low this week. This rare coincidence could mean that the global cryptocurrency industry is rather playing it safe as coins on exchanges continue to decline.
As investors continue to withdraw coins from exchanges, the positive BTC forecast could be validated once market sentiment changes.
BTC Forecast: Upward Momentum Could Hit $28K
The on-chain bullish signs suggest that Bitcoin could rally to $28,000 in the coming days.
However, IntoTheBlock’s IOMAP chart below shows that 1.82 million addresses bought 723,000 BTC at an average price of $27,100. This could form resistance if holders want to sell at breakeven.
However, if there is strong bullish momentum, as predicted, it could serve as a demand zone. Since $27,000 is historically a level where traders would want to buy, BTC could break out and rise to $28,000.
However, the top clusters include 650,000 BTC at an average purchase price of $28,000, as well as 890,000 BTC at an average purchase price of $28,800.
These levels represent major areas of resistance for the bulls to tackle should Bitcoin move higher.
Still, if the $27,100 level forms a resistance, the bears could invalidate the BTC price bullish prediction. However, the 267,000 investors who bought 246,000 BTC at the average price of $26,481 may offer some support.
But failure to hold this key support level could see Bitcoin drop further to $25,000.
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