Bitcoin may be in the short-term correction phase, as chain and market sentiment indicators flash, despite the overall bullish trend.
A July 20 analysis by encryption contributor Shayanmarkets shows that centralized exchange Bitcoin (BTC) has risen to its highest level since June 25th. This rise in this balance reflects ongoing profit cuts by investors, increasing the supply of BTC that could potentially be sold.
This type of reserve increase has historically preceded a period of market decline or price consolidation, especially when it occurs in parallel with the decline in buy-side momentum. DarkFost, a contributor to Cryptoquant, noted that influx of BTC whales has increased significantly in exchange. This further supports a careful outlook.
Inflows averaged monthly to smooth short-term volatility increased nearly $17 billion from $28 billion to $45 billion between July 14th and $1.8 billion.
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The overall upward pressure from whales seeking to secure profit remains a risk factor despite reduced daily inflows. Still, there is a strong sense of optimism.
According to the Arab analyst chain, Cryptoquant’s Bitcoin Bull Score Index is currently 80 years old and shows a very bullish stage. However, this high optimism could also cause overheating. In the past, excessive greed has led to higher volatility, especially as traders cut positions and earn profits after the highest ever.
At a press conference, Bitcoin was trading at $118,307, an increase of 0.4% in the past 24 hours since retreating from its record high on July 22. The asset has declined 2.5% over the past week, but has risen 14% over the past 30 days.
Technically, the daily chart shows short-term fatigue. Bitcoin trades near the middle of the Bollinger band, with the lower band at $105,383 and the upper band at $123,522. The consolidation of the price of $114,453, slightly above the simple 20-day moving average suggests a potential support test.
Bitcoin price analysis. Credit: crypto.news
The volume has been declining compared to recent highs, consistent with the ongoing profitable narrative. At 68.11, the relative strength index is just below the overbuy level, indicating that momentum is cooled despite it being still positive.
If Bitcoin falls below the 20-day SMA and mid-bollinger band, it could drop even further to around $105,000. The advantage is that new breakouts above $122,000 will likely override the bearish theory and confirm that the upward trend is still in place.
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