Bitcoin Approaches 2018 Like Drawdown, Why $20,000 Is A Crucial Level

Bitcoin is moving sideways around its current levels with no clear direction on the lower time frames. The cryptocurrency experienced its worst selling pressure in years, but held firm near its all-time high of 2017.

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At the time of writing, Bitcoin is trading at $20,140 with a 4% gain in the last 24 hours. The general market sentiment turned more positive, as NewsBTC reported yesterday, with the Crypto Fear and Greed Index rising from Extreme Fear levels.

BTC is moving sideways on the 4 hour chart. source: BTCUSD TradingView

According to Chief Commodity Strategist Mike McGlone, Bitcoin and the crypto market are close to the 2018 lows. At that time, the emerging asset class experienced a similar downward trend that pushed the BTC price to lose 75% of its ATH.

At the time, the $3,000 price point became a major bottom that saw a multi-year build-up period. In 2020, when global markets were in turmoil due to the COVID-19 pandemic, BTC again bottomed when it approached $3,000.

After that, the cryptocurrency started a new rise towards price discovery. Macroeconomic conditions are different this time around, Bitcoin could retest its annual low at around $17,000, but McGlone suggest It has reached a point where its long-term holders can profit in the second half of 2022:

(…) The Bloomberg Galaxy Crypto Index is approaching a pullback similar to the 2018 low and Bitcoin discounted to its similar 50 and 100 week moving averages to the prior fundamentals, and we see risk versus reward skewed towards responsive investors in the 2H.

Since its inception, BTC price has historically found a bottom near previous all-time highs. McGlone claims that there are conditions for $20,000 to act as a pivotal support level in 2022 on the back of lower “risk measures” versus the traditional market.

Bitcoin at $20,000 can be seen as $2 in 2011, $200 in 2015 and $3,000 in 2018. Bitcoin and ether risk metrics decline against stocks and the potential for US regulation (Lummis-Gillibrand crypto scheme) shows prevailing maturity.

View Bitcoin’s Short Term Prospects?

On lower time frames, Bitcoin has managed to stay above $20,000 despite the pullback in traditional markets and the strength of the US Dollar. The US currency is approaching a 20-year high as investors continue to dispose of risks amid the current macroeconomic conditions.

Data from Indexes of Materials (MI) records nearly $20 million in bid requests for the price of BTC from $20,000 to $19,000. These levels should act as support in the event of a further decline as BTC whales continue to accumulate.

BTC price around $20 million in buy orders (yellow and red below the price). Source: Material Indicators

Related reading | TA: Bitcoin faces another rejection, can the bulls save the day

Larger BTC investors have bought into the cryptocurrency’s price action over the past week. Addresses containing 100 to 100,000 BTC and 30,000 BTC were added during this period.

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