U.Today – As it nears $70,000, analysts are closely watching a critical supply zone for the largest cryptocurrency. This range is crucial because it represents a key area where a substantial amount of Bitcoin was acquired.
Crypto analyst Ali has identified a key supply zone for Bitcoin, situated between $70,180 and $70,600, where over 450,000 addresses have collectively acquired approximately 273,000 BTC.
The supply zone is an important area on the price chart that often acts as a barrier to bullish price movements. It is where a large amount of Bitcoin was previously purchased, and holders may attempt to break even or take profits, which could lead to further selling pressure.
After a steady bounce from the May 1 lows of $56,500, Bitcoin reached highs of $71,980 on May 21 before encountering resistance. At the time of writing, BTC maintained its declines 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 could play out:
If Bitcoin manages to break above the $70,600 level with heavy volume, it could signal a continuation of the uptrend. This would likely attract additional buyers, driving the price up and potentially establishing a new support level.
On the other hand, if Bitcoin faces significant selling pressure within this range, it could lead to a price rejection and subsequent pullback. This scenario would indicate that many holders want to take profits, which would result in temporary resistance.
Another possibility is that Bitcoin consolidates below this range for a while. This would imply a balance between buyers and sellers before a major price movement.
As Bitcoin considers its next move, price action around the $70,000 mark would be closely watched given the large volume of BTC accumulated in this area.
Based on MVRV price bands, Ali believes that if Bitcoin continues to trade above $65,125, BTC's next local peak before a temporary drop to around $77,593.
This article was originally published on U.Today.
