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Bitcoin recently reaffirmed its king coin status by quickly recovering from under $30k to reach daily highs of $32,807 before correcting once more. While many believe that the aforementioned recovery was a reaction to last weekend’s declines, others believe that Elon Musk’s appearance at the “B Word” event fueled it.
In any case, Bitcoin’s price action last week had some truly unsettling twists and turns. On the 4-hour chart, for example, Bitcoin’s price appeared to project bullish sentiment following an 8 percent price increase after July 21. Its price rose as quickly as it fell, forming a perfect V-shape.
Furthermore, trading volumes for the king coin continued to rise in tandem with the price. While all of the trading volume bars were green, one green bar stood out as the tallest since the price gains on June 23.
So, is Bitcoin out of danger?
A quick look at some key metrics for Bitcoin, such as social dominance and exchange flow balance, revealed a positive picture for the coin. Understanding a cryptocurrency’s social dominance is an effective way of gauging market sentiment. In the case of Bitcoin, its social dominance dropped dramatically on July 21, but it quickly recovered and then increased as the price rose.
Bitcoin’s exchange flow balance for all exchanges also increased, indicating a resurgence of market activity that had been almost non-existent over the previous week. After being in the negative since July 19, the flow balance has now turned positive. Further, Bitcoin’s active addresses saw a decent rise as well and stood at around 800k, at the time of writing.
Furthermore, trade intensity for the top coin, a metric that compares the value of order book trades to exchange inflows, increased – indicating that more market participants wanted to buy rather than sell. These were the cryptocurrency’s highest weekly trade intensity values.
Even though the king coin saw some decent price increases and some healthy metric upticks, it would be premature to conclude that it has entered a solid recovery phase, especially given that corrections were already underway at the time of publication.
The same was highlighted by popular analyst Benjamin Cowen in a recent video. In fact, according to Cowen, “technically Bitcoin is still in a downtrend.” Underlining an interesting downtrend on the Relative Strength Index (RSI) with respect to Bitcoin’s price, he added,
“If we look at the RSI, on the daily timeframe it’s notable that there’s a general downtrend. We are registering lower highs, after lower highs, after lower highs. The first one was in January of 2021, that’s when the bulls were showing the most strength.”
The analyst also stated that while Bitcoin reached new all-time highs, they were not “that impressive,” and with each price ATH, the RSI simply made lower highs in proportion to the price.
“It has been nice to see the valuation of Bitcoin move up by almost 8% but so far, we have not broken this downtrend (of RSI)”
Even though Bitcoin’s RSI moved up to almost vertical, it was still a lower high on the daily chart. As a result, it will be interesting to see if it can break through the 56.35-level. If BTC moves above the $34-35k level, an increase in the RSI indicating heavy inflows could break the previously mentioned level.