BTC distribution cycle reaches its first goal, here’s what to expect next

• Bitcoin price has broken below the 200-week SMA and a significant volume level, suggesting a renewed bearish regime.
• A breakdown of $20,600 would likely result in a crash to about $19,200.
• If BTC manages to turn the $25,000 barrier into a resistance level, it will invalidate the bearish thesis.

Bitcoin price has started a period of controlled selling and is currently approaching short-term support levels. A minor relief rally may occur – before the next stage down to inefficiency and liquidity. Investors need to be cautious as the current pullback has broken significant levels that could trigger a massive sell-off in the future.

This article takes a top-down approach to where BTC may be headed next.

Bitcoin price in fall

Bitcoin price has been in a downtrend since it was rejected at the $24,989 level. The volume profile between June 10 and August 19 shows that the highest traded level, also called the Point of Control (PoC) – an important support and resistance level on the chart – has now changed to $23,377.

This development indicates that a lot of capital entered the market after a brief move above the 200-week SMA. Nevertheless, sellers now appear to be triumphing following the breakdown of the PoC, as well as the 30-day exponential moving average (EMA) at $23,226 and the 200-day Simple Moving Average (SMA) at $22,968.

This triple breakdown is a significant bearish development and does not bode well for upcoming events.

BTC price has moved to the lower limit of its ascending parallel channel in search of support. The volume profile shows the possibility of the price cutting completely through the bottom of the channel and retesting a support area, which extends from $21,300 to $20,300.

Bears are likely to push the Bitcoin price down to this level before taking a short break. From a price action standpoint, $19,248 represents a stable support level that extends to $18,608.

So, from the short to medium term perspective, investors can expect a 15% crash, especially if the ascending parallel channel breaks down at $22,160.

BTC/USDT 1-Day Chart

On the four-hour chart, the Bitcoin price is in the second part of the distribution phase, where it is developing the last supply zones and heading towards the support levels of $22,600 and $22,382.

Beyond these short-term support structures, Bitcoin price will aim to fill the price inefficiency aka Fair Value Gap (FVG) at $21,140 and potentially sweep the same lows at $20,750.

BTC/USDT 4-hour chart

A quick look at IntoTheBlock’s Global In/Out of the Money (GIOM) model shows that the 2.6 million addresses that bought approximately 1.54 million BTC are “At the Money”. About two days ago, these investors were “In the Money” and were expected to dampen any selling.

These addresses have bought BTC at an average price of $20,366. So a breakdown of this level, which coincides with the technical forecasts, could result in a steep correction to $12,000 for BTC, as holders discard their losing positions.

BTC GIOM

Although things look very bleak for the Bitcoin price, the only way for bulls to invalidate the bearish outlook is if they can turn the $25,000 barrier into a support level. This move will give bulls a chance to rally to a price floor and then propel BTC to a new local high, from $28,000 to $29,000.