Home CryptoCurrency News Why The Bitcoin Price May Be Ready To Return To $20,000
CryptoCurrency News - October 22, 2022

Why The Bitcoin Price May Be Ready To Return To $20,000

The Bitcoin price managed to close yesterday’s daily candle above critical support, giving bulls a fighting chance to prevent further downside. However, today’s trading session has favored the bears, with BTC moving below the $19,000 area. 

At the time of writing, Bitcoin stands at $18,900, with a 1% loss in 24 hours and a 2.4% loss in one week. Other cryptocurrencies in the crypto top 10 by market cap follow a similar trend except for Cardano and Solana. These cryptocurrencies are recording heavy losses across the board. 

Bitcoin price BTC BTCUSDT
BTC’s price moving sideways on the 4-hour chart. Source: BTCUSDT Tradingview

Bitcoin Price Takes Downside Liquidity

Last week, the Bitcoin price negatively reacted to the September Consumer Price Index (CPI) print published by the U.S. government. This metric is one of the benchmarks for inflation, and its September print hinted at higher levels. 

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In turn, the U.S. Federal Reserve (Fed) will tighten the monetary conditions of global markets. This policy will continue to cap any bullish momentum for Bitcoin and risk-on assets, including those in legacy markets. 

This reaction to higher inflation, and a hawkish Fed, led the Bitcoin price to revisit its yearly lows near $17,600 as the September CPI print was published. The crash was short-lived as BTC rebounded to the high area of $19,000s. 

During the flash crash, many traders opened long positions while BTC rebounded. These traders expected a higher move, and their leverage positions left a lot of liquidity to the downside. According to analyst Justin Bennett, the Bitcoin price is taking that liquidity before resuming its bullish momentum. 

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Bennett pointed out that BTC is moving in a tight range between $18,600 and around $19,800. The cryptocurrency might return to those levels before attempting another break of critical resistance near the $20,000 area. The analyst said the following while sharing the chart below: 

This has been my plan for $BTC all week. It was a combination of last Thursday’s long lower wick getting partially filled + the liquidity gap at mid $18k + channel support.

Bitcoin price BTC BTCUSDT Chart 2
BTC’s price taking liquidity at $18,600 and moving into $19,800. Source: Justin Bennett via Twitter

Bitcoin Shows Signs Of Capitulation

At the time of writing, the Bitcoin price appears to follow this trajectory. The cryptocurrency is back at its range and could be aiming for the top of the channel.

On higher timeframes, Bennett said that while $18,700 holds on the daily chart, Bitcoin might be gathering momentum to push into the central area in the $20,000 region before making a fresh leg lower. 

Data from research firm Santiment indicates that Bitcoin is showing signs of capitulation. Many believe that over the past months, BTC holders capitulated en masse, making this long period of consolidation a painful step in gearing up the next move to the upside. 

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