Bitcoin’s support near $20,000 has been “amazing,” expert says

Bitcoin prices have been trading relatively close to the $20,000 level for several weeks now, a development that one analyst has described as particularly noteworthy.

“BTC’s support strength around $20k has been astonishing!” said Tim Enneking, CEO of Digital Capital Management.

He highlighted the cryptocurrency’s stability at a time when it has hovered near the aforementioned level since late September, TradingView figures show.

Describing this relative stability as “virtually unique in Bitcoin’s price history,” Enneking emphasized that “there are comparable periods, but nothing like this.”

In the past, every major historical pullback in bitcoin prices has been more severe than the current drop, when that pullback is measured in terms of the percentage decline between the all-time high and recent low, he emphasized.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Change investor profiles

Explaining bitcoin’s ability to retain support near the $20,000 level, a development Enneking described as atypical, the analyst pointed to the changing demographics of investors.

“In short, BTC support at this level and for this duration is abnormal. We attribute this to a change in the average BTC investor profile: more institutions and more whales (who have actually sometimes become institutional investors themselves).”

Cryptocurrency markets have changed significantly over the years, benefiting from a steady increase in institutional involvement.

This situation provides a significant contrast to previous time periods, such as the 2017 bull market, where astronomical gains were attributed to factors such as the eager interest of retail investors.

While the price of bitcoin skyrocketed during that period, rising from close to $1,000 at the start of 2017 to nearly $20,000 by the end of the year, according to CoinDesk data, the gains were unsustainable and the digital currency fell to less than $4,000 in late 2018.

Other digital currencies saw significant declines, with ether, the world’s second most valuable cryptocurrency, falling over 80% in 2018.

These sharp declines coincided with a period of low sentiment and investment, which many described as “Crypto Winter.”

The period eventually ended, with bitcoin pushing higher in 2019, hitting new highs in 2020 and 2021, peaking near $70,000 late last year.

An uncertain view

While no one knows for sure what the cryptocurrency will do going forward, analysts who provided input to this article offered a mixed outlook.

Enneking, for example, offered a bullish view on the digital asset’s future prospects.

“Given the correlation between crypto and fiat markets, and their mutual dependence at the moment on interest rates, i.e. inflation, the prognosis for BTC is good,” he said.

“There are now plenty of macroeconomic signals that inflation has peaked, and as that conclusion sinks in a little deeper, we’ll see BTC start to move up, probably quite strongly.”

However, Armando Aguilar, an independent cryptocurrency analyst, gave a different view on the matter, talking about factors that could cause disadvantages.

“Bitcoin investors appear to be holding their digital assets at a loss (BTC net unrealized profit/loss) according to data from Glassnode and CryptoQuant,” he said.

“Further market pressures and potential financial pressures could force investors to sell,” Aguilar said.

“This will move the price of BTC lower, and as history repeats itself, we may see institutional investors accumulate BTC near recent ATL levels.”

He also stressed that falling prices could force some miners to offload the bitcoin they produce to keep the lights on, a development that could create further losses in the digital currency.

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.