As Bitcoin looks set to confirm a solid hold above $40,000, on-chain evidence indicates that bullish sentiment has returned to the market. After recording eight straight days of green candles and a week that saw Bitcoin add $10,000 to its price, could this finally be the recovery we’ve been waiting for?
According to data from CryptoQuant, Bitcoin recorded its largest single-day exchange outflow in a year. Almost 57,000 BTC worth $2.3 billion was moved to cold storage, web wallets, or other long-term storage – a strong sign that investors believe Bitcoin will continue up from here. However, much of this movement could come as a result of major exchange Binance reducing its non-KYC withdrawal limit from 2 BTC to 0.06 BTC.
The push for $40k
The $40k mark has historically proven to be a tough resistance level, rejecting Bitcoin heavily on 8 January earlier this year and sending it back down to $30,000. However, a strong recovery saw it break $40k almost exactly a month later – could we see that same action happen again in August?
Depending on who you speak to, we could go either way from this point. A poll by the popular trader and controversial Crypto Twitter voice Dave the wave (@davthewave) shows that community sentiment is fairly balanced, with just over half of responders believing this is just a temporary bounce. At the time of print, less than half of responders felt we’ll see another all-time high (ATH) from this point.
Bounce, or Back to ATH?
— dave the wave🌊 (@davthewave) July 28, 2021
Other positive indicators include data from bybt.com which shows a huge increase in open options interest on BTC’s $50,000 strike price. Clearly, a lot of people somewhere think we’re going up further from here. However, Bitcoin’s relative strength index (RSI) – which has now broken above the significant 70 marker – shows signs of moving into overbought territory. This means we will likely see a brief correction back into the mid-to-high $30k range before BTC makes a more definitive attempt at breaking $40k.
