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Bitcoin Traders Grow Optimistic, Pundits Predict $500K BTC

Despite Bitcoin's ongoing consolidation phase, different metrics suggest that a breakout will soon rock market prices.

BTC Price analysis April 23

Key Takeaways

  • Bitcoin is consolidating between the $11,200 support and the $12,140 resistance level in preparation for its next break out
  • While the direction of BTC's trend is difficult to discern, one particular pricing model estimates a bullish breakout within the next month
  • Given the optimistic outlook, large investors entered a buying spree that will help push Bitcoin prices further up

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Optimism grows as traders get comfortable with the cryptocurrency market’s current bull cycle. Some of the industry’s most influential figures predict that $500,000 Bitcoin is on the horizon, but indicators tell a different story.

Bitcoin Prepares for Explosive Volatility

The flagship cryptocurrency has left traders scratching their heads, defying even the most well-researched predictions. Bitcoin has mostly been contained between the $11,200 support and the $12,140 resistance level and has yet to clearly signal its next move. Even though it reached a new yearly high of $12,500 on August 17, BTC was still unable to break out of this consolidation range.

The prolonged stagnation phase that BTC has gone through is forcing the Bollinger bands to squeeze on the daily chart, indicating that a period of high volatility is forthcoming. A daily candlestick close below $11,200 or above $12,140 will determine the direction of Bitcoin’s likely explosive breakout.

Bitcoin US dollar price chart
BTC/USD on TradingView

Slicing through the overhead resistance would likely be followed by a spike in buy orders. Such a spike could give Bitcoin the momentum it needs to resume its uptrend. If this were to happen, BTC could advance towards mid-June’s high of $13,870. But if sell orders begin to pile up, the pioneer cryptocurrency might break below the $11,200 support level—turning this area into resistance could cause BTC to drop to the next significant level of support around $10,050.

Due to the ambiguous outlook, the area between the $11,200 support and the $12,140 resistance is a reasonable no-trade zone. Regardless of the risks, some of the most prominent industry figures remain bullish.

Market Participants Grow Optimistic

The Winklevoss twins, for instance, recently published an article where they make a case for Bitcoin prices reaching $500,000. Cameron and Tyler Winklevoss argue that BTC possesses the same characteristics that make gold so valuable.

The founders of American-based cryptocurrency exchange Gemini maintains that the bellwether cryptocurrency is the only known commodity with a “deterministic and fixed supply.” Based on this attribute, Cameron and Tyler believe that Bitcoin is a superior asset to gold “by an order of magnitude.”

“Bitcoin has already made significant ground on gold—going from whitepaper to over $200 billion in market capitalization in under a decade. Today, the market capitalization of above ground gold is conservatively $9 trillion. If we are right about using a gold framework to value bitcoin, and bitcoin continues on this path, then the bull case scenario for bitcoin is that it is undervalued by a multiple of 45. Said differently, the price of bitcoin could appreciate 45x from where it is today, which means we could see a price of $500,000 U.S. dollars per bitcoin,” said the Winklevoss twins.

Adding to the astronomic price prediction that the Winklevoss twins have made, a sense of optimism can be seen across the entire crypto market. Data from blockchain data analytics firm Glassnode suggests that Bitcoin prices have migrated from “Hope” to “Optimism” and may soon enter the “Belief” stage. Based on the difference between relative unrealized profits and losses, this technical index suggests that BTC has a long way to go up before it enters the last stage of the market cycle, dubbed “Euphoria.”

Bitcoin's Psychological Market Cycle by Glassnode
Bitcoin’s Psychological Market Cycle by Glassnode

Although $500,000 BTC may seem farfetched, one particular pricing model estimates that the flagship cryptocurrency is on its way there. The stock-to-flow index, which considers the ratio between the BTC’s mined supply and its yearly inflation rate, projects that Bitcoin’s market value is about to increase 10x.

Plan B, the analyst behind this price model, argues that after the block reward reduction event in mid-May, Bitcoin’s market value is set to rise towards $1 trillion. Such a high market capitalization translates into a BTC price of $55,000 by March 2021.

Bitcoin's Stock to Flow Ratio by LookIntoBitcoin
Bitcoin’s Stock to Flow Ratio by LookIntoBitcoin

More importantly, the stock-to-flow model anticipates that within the next month, the pioneer cryptocurrency will be trading above $15,000.

Buying Pressure Behind BTC Rises

As the public becomes aware of Bitcoin’s potential, large investors are rushing to add BTC to their portfolios. Even one publicly-traded U.S. corporation has begun holding Bitcoin as a reserve asset. The substantial spike in buying pressure behind Satoshi Nakamoto’s creation can be better seen on Santiment’s holder distribution chart.

Based on this on-chain metric, the demand for the bellwether cryptocurrency seems to have risen dramatically over the past few days. The behavioral analytics firm recorded a significant increase in the number of addresses with tens of millions of dollars in BTC, colloquially known as “whales.” Since August 27, the number of addresses holding 1,000 to 10,000 BTC shot up. Ten new whales joined the network these last few days.

Bitcoin's Holder Distribution by Santiment
Bitcoin’s Holder Distribution by Santiment

At first glance, the recent increase in the number of large investors behind Bitcoin may seem insignificant. However, when considering that these market participants hold between $11.7 million and $117 million in BTC, the sudden spike in buying pressure can translate into hundreds of millions of dollars.

If the buying spree by these large investors continues, then Bitcoin could break new yearly highs. But first, it must crack the $12,140 resistance level to add credibility to the bullish scenario.

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