In a surprising turn of events, Bitcoin confirmed its status as the king coin by quickly climbing above $ 35,000 and testing the $ 40,000 mark. While many may think that the recovery mentioned above is the beginning of a bull market that marks the end of long and terrible price declines, others believe that it is short-term gains that will not last long. In fact, the latter theory cannot be dismissed given the nearly 7% drop in prices in eleven hours towards the end of July 26th.
Tops bring Bitcoin to the top?
After falling for over three months and consolidating sideways, Bitcoin finally seemed to be on the way to recovery. Bitcoin inflows into exchanges saw the largest one-day percentage increase in over a year, up 364.4%. While this could indicate an increase in inflows, suggesting increased selling pressure in the market, it also meant that activity on the network has finally resumed.
In addition, a notable increase in the Relative Strength Index (RSI) of a BTC has been observed. A previous article underscored BTC analyst Benjamin Cowen’s theory that for a Bitcoin rally it was important to break away from the ongoing downtrend in the RSI on a daily chart.
The good news is that the RSI finally broke off a six-month downtrendline that was almost vertical. At the time of writing, RSI was trading at 66.5.
A look at the past RSI trend also showed that its breakout was of paramount importance to its price gains. Whenever the indicator broke out of a long-term downtrend, this led to a significant increase in the Bitcoin price. An example of this was the RSI downtrend from May to July 2020, which broke around July 20, 2020 and resulted in almost 35% price gains.
Twists and turns
In the midst of the price gains, the spot market showed some healthy peaks. The average trading intensity of BTC on the last day was 7.62, which was above the 180-day average. On July 25th, the trading intensity was 11.4, the highest since June. That being said, there have been some interesting twists in the futures market as well.
BTC’s realized profit also increased. Realized profit peaked at these levels after June 1st, making it the highest in two months. Futures volume also peaked after falling to lower levels around July 19th.
While the surge in futures volumes after sustained inactivity this month suggested decent activity in this area, it could also be due to brief liquidations that took place amid the surge in prices.
While these metrics suggest a bull market for the top coin, as highlighted in a previous article, it should be viewed with caution given the 7% drop in prices on the last day.