U.Today – With the price hovering near $70,000, analysts are closely watching the critical supply zone of the largest cryptocurrency. This range is crucial because it represents a key area where a significant amount of Bitcoin has been purchased.
Crypto analyst Ali identified a key Bitcoin supply zone located between $70,180 and $70,600, where over 450,000 addresses purchased a total of approximately 273,000 BTC.
The supply zone is an significant area on the price chart that often acts as a barrier to upward price movements. This is where a huge number of Bitcoins have been purchased previously and holders may be looking to break even or make profits, potentially leading to increased selling pressure.
After steadily rebounding from May 1 lows of $56,500, Bitcoin hit highs of $71,980 on May 21 before encountering resistance. At the time of writing, BTC continued to decline from the previous day, down 1.91% in the last 24 hours to $69,998.
Potential scenarios
As Bitcoin approaches the highlighted critical supply zone, several scenarios may unfold:
If Bitcoin manages to break the $70,600 level on weighty volume, it could signal a continuation of the bullish trend. This would likely attract additional buyers, driving up the price and potentially establishing a up-to-date level of support.
On the other hand, if Bitcoin faces significant selling pressure in this range, it could lead to price rejection and subsequent pullback. This scenario would indicate that many holders are looking to take profits, causing momentary resistance.
Another possibility is that Bitcoin consolidates below this range for some time. This would mean a balance between buyers and sellers ahead of any major price movement.
As Bitcoin considers its next move, price behavior around $70,000 will be closely watched given the massive amount of BTC accumulated in this area.
Based on the MVRV price bands, Ali believes that if Bitcoin continues to trade above $65,125, it will be another local high for BTC before a momentary decline near $77,593.
