Bitcoin (BTC) price has consolidated around the $29,500 support level after the Aug. 10 CPI report showed a modest 0.2% increase in inflation. On-chain analysis examines whether crypto investors will retest $32,000 or book gains in the coming days.
On August 10, the US Bureau of Labor and Statistics released the July 2023 CPI report, showing a slight increase in inflation. Although the inflation report was in line with market expectations, BTC price dipped slightly to $29,300 following initial investor reactions.
On-chain data suggests that Bitcoin bulls are making behind-the-scenes efforts to spark an early price rally.
Following the CPI report, Bitcoin investors have withdrawn another 6,000 coins from exchanges
According to on-chain data, Bitcoin investors responded to the Aug. 10 CPI report by withdrawing 5,949 BTC from exchanges, worth about $175 million.
The CryptoQuant Exchange Reserves chart below shows that that brings total withdrawals in August to 19,837 BTC, a whopping $585 million.
Bitcoin (BTC) investors withdraw millions after CPI report | Foreign exchange reserves data | Source: CryptoQuant
Exchange Reserves track real-time changes in total bitcoin balances deposited by investors to crypto exchanges worldwide. A sustained decline in FX reserves means investors are HODLing for future gains rather than looking for near-term sales opportunities.
This suggests that while the CPI report triggered a weak decline in price, the bulls are taking steps to turn the tide in the coming days.
Bulls are making efforts to prevent a major price correction
Bullish bitcoin traders have placed more buy orders, further confirming their positive outlook on preventing a prolonged BTC price slide. The Exchange On-Chain Depth of Market chart shows the volume of active buy/sell orders placed by crypto traders on different exchanges.
As of today, the bulls have prepared active buy orders for 24,000 Bitcoin at current prices. Notably, this significantly exceeds the 22,700 million active BTC sell orders from traders looking to exit.
When an asset’s active buy orders outweigh the market supply, it signals that it may be on the verge of a price rally. As of today, bitcoin sell orders exceed market supply by 1,300 BTC.
If momentum turns bullish as predicted, buyers could incrementally increase bid prices in the race to fill their orders quickly.
To sum up, the aforementioned drop in FX reserves and rising market demand together could trigger a BTC price rally.
BTC price prediction: $31,000 could be next
The In/Out of Money (IOMAP) data shows the current distribution of BTC holders’ entry prices to set key support and resistance levels. It shows that the $30,200 area is the critical sell wall that could prevent BTC from reaching the $31,000 price target.
As shown below, 2.49 million addresses had purchased 1.08 million coins at an average price of $30,268. If they close their positions, they could trigger a pullback.
But if Bitcoin investors continue to remove coins from exchanges, as mentioned earlier, the supply crunch is likely to propel BTC towards the $31,000 target.
Still, the bears could invalidate this positive BTC price prediction if the price breaks below the $28,500 support. However, the 176,000 addresses that bought 944,000 BTC at an average price of $28,488 could provide significant support.
Still, BTC could sink towards $27,000 if this support level gives way.
Disclaimer
In accordance with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, however, market conditions are subject to change without notice. Always do your own research and consult a professional before making any financial decisions.
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