The price of Bitcoin (BTC) has shown a volatile performance in May 2023. Nevertheless, the $25,000 support level has remained intact for now as on-chain data indicates a potential breakout towards $30,000. The question is, can the forthcoming “Pizza Day” celebrations influence the BTC prices positively?
On May 5, 2023, the BTC value fell below $29,000 due to the US debt-ceiling crisis. Additionally, a considerable spike in BRC-20 Ordinals transactions resulted in an increase in fees, which also played a role in the price correction.
As a response to high fees, many investors have turned towards alternate blockchain networks like Litecoin for cost-effective transactions. However, with “Pizza Day” looming around, on-chain data shows that the demand for BTC is currently on the rise, as the transaction fees continue to decrease.
Bitcoin Fees Have Crashed to “Pre-Ordinals” Levels
The BTC fees have now dropped back to the levels before the recent spike in BRC-20 Ordinals transactions. The total daily BTC fees have currently reached $1.93, displaying a notable 89% drop from its peak of $17.85 million, as per the data from IntoTheBlock.
High transaction fees tend to discourage users from carrying out transactions, leading to a drop in network traction and ultimately, a fall in price. As the congestion on the Bitcoin network reduces and fees continue to decline, the BTC prices could gain momentum in the ensuing days.
Demand for BTC is on the Rise
The reduction in fees has led to an increase in the demand for BTC. As shown in the IntoTheBlock chart below, digital exchange order books reveal that BTC buy-orders are currently exceeding the market supply.
As of now, investors have placed limit orders to purchase 26,700 BTC. Meanwhile, there are only 19,000 available coins up for sale at current prices. The Bitcoin Exchange Market Depth metric gives an aggregate of all limit orders placed on globally recognized exchanges by Bitcoin traders, and with its current excess market demand of 7,700 BTC, the prices are expected to rise as buyers begin to compete.
To summarize, if the network fees continue to drop, then the demand for BTC is likely to increase, and ultimately validate the BTC price prediction of $30,000.
BTC Price Prediction: The Bulls Could Reclaim $30,000
The In/Out of the Money Price Distribution data by IntoTheBlock suggests that BTC could soon reclaim the $30,000 milestone. However, the resistance zone of $27,700 has been challenging to surpass. The 2.18 million investors who purchased 820,000 BTC at the maximum price of $27,700 present a risk of a pullback.
However, if strong bullish momentum emerges, those holders could turn bullish, and Bitcoin could break out and rally towards $30,400.
On the other hand, if the BTC price drops below the key support level of $26,000, then the bears could invalidate the bullish BTC price prediction. Nevertheless, the 251,000 investors who bought 238,000 BTC at an average price of $26,021 could offer support. But, failing to hold that key support level could result in a further drop of BTC towards $25,200.
