What will happen to the bitcoin (BTC) rally ahead of the Fed's rate decision
Date: 2023-07-23 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
BTC bulls panicked when the price of bitcoin dived below the $29,700 mark on Thursday. Let's see what on-chain indicators say about the prospects for maintaining the rally
Amid increased interest from US asset managers, as well as thanks to Ripple's victory over the SEC, the price of BTC confidently held above the $30,000 mark for most of July 2023.
Will the bulls be able to continue the rally ahead of the next US Federal Reserve interest rate decision, which will be announced on July 26?
The interest of BTC whales has reached new heights
Thanks to a flurry of applications for bitcoin ETFs filed by a number of large companies, including Blackrock, demand for bitcoin from whales reached new heights in the second half of 2023. According to Santiment, the daily number of BTC transactions worth more than $1 million is growing.
The chart below shows that on May 22, this indicator formed a minimum at the level of 943. Since then, in June and July 2023, bitcoin whales have consistently increased the number of Transaction.
On June 29, the 2023 high was updated at 2983. Most recently, on July 18, the figure was 2571, which is 172% higher than the low of May 22.
The indicator of intraday whale transactions worth more than $1 million allows you to track the trading activity of large institutional investors and wealthy hodlers.
A significant increase in the number of whale transactions over an extended period is usually interpreted as a bullish signal for several reasons. First, institutional investors have been known to hodulge their investments for a longer time.
In addition, whale liquidity allows other retail investors to make high-volume transactions without significant price spikes. Thus, the growth in demand from whales suggests that the bitcoin rally may continue in the coming weeks.
Bitcoin stocks on exchanges are declining
In addition, the volume of bitcoin supply on exchanges is declining. This is another important on-chain indicator that promises a recovery in the price of BTC. According to analytics platform CryptoQuant, the number of bitcoins listed on trading platforms has dropped significantly this week.
On July 13, the balance of exchange reserves was 2.09 million BTC. As of July 21, it has decreased by 10,000 BTC.
Cryptoquant's exchange reserve data assesses changes in market sentiment by tracking the amount of BTC sent to leading crypto exchanges. A decline in this indicator is a bullish signal, indicating that more investors are looking to hodl the coin rather than looking for short-term trading opportunities.
If exchange reserves fall even more, then the resulting shortage of supply in the market may push bitcoin to an early rebound above the $30,000 mark.
Thus, the increase in demand from whales and the reduction in supply on exchanges are important signs that the bulls can maintain the momentum of growth.
BTC Prediction: $32,000 Mark Remains Achievable
In such favorable conditions, BTC seems to be able to reach the $32,000 area in the next rally. However, the path to this goal is covered by resistance at $30,740.
As shown below, 3.18 million addresses purchased 1.43 million BTC at a maximum price of $30,740. If they choose to sell their coins at breakeven, the price could fall below the $30,000 mark again.
But if the bullish momentum intensifies, it could form a larger accumulation zone and cause bitcoin to move towards the target level of $32,000.
However, if the market expects a negative rate decision by the US Federal Reserve, the bears could trigger a retest of the $27,000 level. However, 803,000 investors holding 547,000 BTC at an average price of $28,400 may try to defend the rally.
If this support level fails, bitcoin could fall to $27,000.
