Bitcoin Heads for a Resistance Test, But Here’s Why a Breakout…
Bitcoin [BTC] briefly crossed $24,000 on July 29 thanks to a strong mid-week bullish pullback. This is the second time the cryptocurrency has risen above this price level in July, showing significant bullish strength. A closer look reveals that there is more to the rally than meets the eye.
Just a week ago, we saw Bitcoin embark on a bearish retracement after an earlier rally pushed into the rising resistance level. The price has moved in an ascending channel underlined by resistance and support.
However, the price did not push back to the support, but it came close. This was an important observation because it highlighted the strong bullish strength and rising price floor.
The king coin was trading at $23,731 at press time, representing a 14% upside from its July 27 low. It also represents a small pullback from the 24-hour high of $24,442 after retesting the rising resistance line.
Source: TradingView
Despite the upside, BTC remained within the neutral zone and thus there is still room for the price to recover and potentially cross the $25,000 price level.
But can it manage to reach this target, or is the latest rally a temporary upside that will be met by a bearish retracement?
Green sign in front
The answer may be for the same reason Bitcoin fell sharply in June. The Purpose Bitcoin ETF Holdings, one of the ETFs invested in BTC, sold around 24,500 BTC.
It was one of the big sellers that created a lot of downward pressure at the time, so it makes sense that the same ETF would have a positive impact if accumulated.
The Purpose Bitcoin ETF Holdings increased its BTC by 3,077 Bitcoin in the last three days. If we calculate the amount using BTC’s lowest price level on July 26, the ETF spent more than $63 million on the BTC purchase.
Notably, Bitcoin’s most recent upside occurred during the same period that Purpose Bitcoin ETF Holdings made the purchase.
Source: Glassnode
Despite the upside and the accumulation of ETFs, the market flows reveal that selling pressure has increased. Bitcoin had 46,337 BTC in exchange volume at press time. And it had lower currency outflows of 42,069 at press time.
This explains the selling pressure after interaction with the resistance line.
Source: Glassnode
The accumulation of ETFs is a healthy sign for Bitcoin. Such a strong accumulation is guaranteed to raise the floor price even higher.
It is unclear whether more institutional investors are buying BTC, but if that is the case, Bitcoin is likely to break the current resistance and achieve more upside.
