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28.07.202114:28 Forex Analysis & Reviews: Bitcoin tries to break through the $ 40,000 mark, but on-chain indicators continue to point to the unreasonable bullish rally

Yesterday, Bitcoin completely leveled the rebound from $ 40,000 that occurred on July 26. Its price has managed to rise by 7% in 24 hours, and the weekly dynamics of price growth is +33%. As of 11:00 Universal time, the main cryptocurrency has broken through the level of $ 40 thousand and is trying to consolidate above the upper line of a wide range of fluctuations. At the same time, the growth of the on-chain indicators of Bitcoin has been observed for three days, but the analysis of the current indicators of the asset indicates the unreasonableness of such a sharp bullish rally.

To start, it is worth noting that the sharp surge in BTC/USD indicators was provoked by a short-squeeze and a surge in volatility in the Bitcoin options market. Due to this, the price of the cryptocurrency rose to $ 40 thousand. The first alarming signal was the relatively low indicators of open interest for monthly contracts in the price range from $ 29 to $ 40 thousand. In addition, the situation on the futures market is changing very slowly, where bearish sentiments persist. The funding costs still remain in negative values, even despite the surge provoked by the liquidation of shorts.

Moreover, a sharp surge in trading volumes and short-squeeze did not affect the dynamics of the exchange value transferred in 24 hours, which remained at the same positions. Considering all these, the active price movement of the BTC/USD pair quotes is not supported by the corresponding on-chain and social activity, which indicates the lack of fundamental growth factors.

Exchange Rates 28.07.2021 analysis

At the same time, we will not tolerate the bears. It can be assumed that Bitcoin's price is growing too fast due to the elimination of shorts. Such a strong upward jerk does not allow the market to restore the necessary indicators in parallel with the price movement. However, positive changes are still being observed. For example, an analysis of the behavior of bitcoin addresses indicates a clear increase in the number of those who receive coins, while the number of addresses spending BTC is slowly declining.

The same statistics are supplemented by a statement from the Binance crypto exchange. According to it, Bitcoin was withdrawn from the platform in the amount of more than $ 1 billion. The number of unique addresses that are in contact with cryptocurrency is also growing. In recent days, it has reached the 900 thousand mark and will soon reach 1 million. There is also a twofold increase in the volume of daily trading, which indicates a growing interest in cryptocurrency. Given all this, it would be incorrect to say that the current BTC rally is fiction provoked by a combination of factors.

Exchange Rates 28.07.2021 analysis

As of 11:00 Universal time, Bitcoin is quoted in the area of $ 40.2 thousand, showing positive local dynamics of price movement. If the cryptocurrency manages to break through the upper resistance line, which has been stretching since the end of May, the asset will open the direction to the $ 47 thousand mark. But if it fails to consolidate over this area, the digital asset will fall back to the nearest support zone in the area of $ 36.2 thousand. The main technical indicators of the cryptocurrency indicate a bullish mood, so Bitcoin will most likely be able to break through the $ 40.5 thousand mark.

The four-hour stochastic oscillator has formed a bullish intersection, and the MACD continues to grow. At the same time, the RSI indicator fell to the level of 60, which indicates a growing interest in the asset. On a narrower chart, BTC is also showing a bullish mood. Given the current indicators of the cryptocurrency, bitcoin has every chance to break through the $ 40 thousand level and continue its upward movement. If by this time, the market has time to accumulate sufficient volumes and increase the on-chain activity of BTC, then all the prerequisites for further movement to the level of $ 47 thousand and the primary upward target in the area of $ 50 thousand will be opened.

Exchange Rates 28.07.2021 analysis

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Artem Petrenko,
Experto analítico de InstaForex
© 2007-2021
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