Bitcoin Weekly Forecast: BTC revisits crucial support before exploding to $60,000

Bitcoin price is currently retracing after failing to pierce through a thick resistance barrier. Going forward, investors can expect the pullback to bounce off a significant support level confluence and give the uptrend another go.

Bitcoin price to reattempt bull rally

Bitcoin price rallied 40% between January 24 and February 10 and pierced the weekly supply zone, extending from $45,550 to $51,860. This upswing paused for a brief moment, creating a demand zone ranging from $36,398 to $38,895.

The recent rejection at the weekly supply will likely knock BTC down to the demand zone, allowing sidelined buyers to get in on the next leg-up. Moreover, the presence of the weekly support level at $39,481 makes this confluence a high probability reversal area.

The resulting uptrend needs to slice through the weekly supply and produce a daily candlestick close above $52,000 to extinguish any traces of a bearish outlook. This move will also set up a higher high and reveal the start of an uptrend.

In this scenario, investors can expect Bitcoin price to make its way to the next significant level at $60,000.

BTC/USDT 1-day chart

IntoTheBlock’s Global In/Out of the Money (GIOM) model supports the bullish outlook obtained from a technical perspective. This on-chain index shows that the immediate support is relatively stronger than the resistance barrier, suggesting that a bullish reversal is around the corner.

Therefore, a bounce around the $37,000 level is likely to propel BTC to $44,049, where roughly 939,080 addresses that purchased 495,210 BTC are “Out of the Money.” Since this area of underwater investors is relatively weak, market participants can expect the pioneer crypto to slice through it and make its way up to the $52,000 barrier.

BTC GIOM

Further depicting the bullishness of investors for Bitcoin price is the supply on exchanges metric. This on-chain indicator has reached a three-year low at 2.05 million, suggesting that long-term holders are optimistic as ever about BTC price performance.

Since 2022, the number of BTC held on centralized exchanges has dropped by 190,000, showing confidence among these holders.

BTC supply on exchanges

The entity-adjusted dormancy flow indicator is used to measure the primary trend of BTC and assess if it is bullish or bearish. Much like the MVRV Z-score indicator, a dip into the green band suggests a reversal for BTC, and the red band indicates cycle tops.

This fundamental index is obtained by dividing the current market capitalization and the annualized USD-denominated dormancy value. Dormancy refers to the average number of days each coin transacted remained dormant or unmoved, a gauge of the market's spending pattern.

The on-chain metric bottomed at 204,1037 on January 24, a level last seen in 2015, indicating that the downside for BTC is capped and that a reversal is likely. 

BTC entity-adjusted dormancy flow

Additionally, miners also seem to be bullish on Bitcoin price, as indicated by the Miners’ Positional Index (MPI). This on-chain index is a ratio of the total miner outflow to its one-year moving average of total miner outflow.

For roughly a year, this metric has dipped into the negative territory, indicating that miners are not sending their BTCs to exchanges, indicating that they are bullish and effectively reducing the overall sell-side liquidity.

BTC MPI 

All in all, Bitcoin price looks optimistic from a long-term outlook perspective; however, the bearish threats are still not invalidated. As BTC approaches the daily demand zone, extending from $36,398 to $38,895, there is a possibility of a sell-off.

If the potential spike in selling pressure knocks BTC to produce a daily candlestick close below $34,752, it will create a lower low and invalidate the bullish thesis. Since BTC has not erected a higher high on a daily chart, the odds are likely to be skewed in the bears’ favor, triggering another leg down.

In this case, investors can expect BTC to revisit the $29,100 support level and collect the liquidity resting below it. Doing this will effectively extinguish the selling pressure and indicate that a full-blown reversal is likely.