Cryptocurrency investors continue to enjoy bullish price action this week after Bitcoin (BTC), Ether (ETH) and a handful of digital currencies surged on July 20 along with gains in traditional markets.
Data from Cointelegraph Markets Pro and TradingView shows that a midday rally by Bitcoin bulls managed to lift the top cryptocurrency to a daily high of $24,281, sparking a fresh round of bullish comments on Crypto Twitter.
BTC/USDT 1-day chart. Source: TradingView
While the week-long rally helped boost investor sentiment, many analysts are warning traders not to get ahead of themselves as the market still presents some red flags that deserve attention.
Prepare for the inevitable withdrawal
Bitcoin’s rally above $24,000 officially confirmed the breakout from the previous trading range between $18,000 and $22,500, according to market analyst Caleb Franzen, who posted the following chart pointing to the question the market now faces.
Btc/usd 1 day chart. Source: Twitter
Franzen said,
“Regardless, I think the next pullback will be a major test in this bear market. Will buyers intervene aggressively in the pullback or give up?
Whale wallets remain dormant
One reason to be wary of the current pool’s ability to sustain itself is the lack of whale portfolio activity, according to research firm Jarvis Labs on-chain.
Bitcoin divergence chart. Source: Jarvis Labs
The red and orange dots on the BTC divergence chart above represent buying activity by large and small whale wallets at different points in time. As indicated by the box marked in red, whale activity has been virtually non-existent over the past few months as Bitcoin has trended lower.
Data from Jarvis Labs also shows that larger entities have not yet returned to active buying, and the chart below shows the change in BTC whales.
BTC whale carries change. Source: Jarvis Labs
Jarvis Labs said,
“We want to see this pattern of colored dots start moving up and to the right. If we get it, that would be a positive sign that any rally could have significant momentum behind it.”
Based on the trends identified, Jarvis Labs stated that “it is difficult to be very excited about a rally that extends beyond the liquidity of around $28,000,” instead suggesting that “at the moment, the lower range looks like $25,000 over the weekend.” Most likely.”
Related: Bitcoin Could Reach $120,000 In 2023, Trader Says With Bitcoin Price Rising 25% In Week
High time frame trend is still down
The shift in sentiment over the past week was acknowledged by market analyst and swing trader il Capo from Crypto, who noted that “the lower time frame trend is bullish, no doubt about that.”
But before fully jumping into this rally, Crypto’s il Capo also posted the following chart warning that “the higher time frame trend is still down and this is another lower high.”
BTC/USD 12 hour chart. Source: Twitter
Il Capo of Crypto said,
“Ltf [low time frame] confirms a drop below $22,000. Main target remains $15.8K-$16.2K.”
The total cryptocurrency market capitalization is now at $1.062 trillion and the Bitcoin dominance rate is 42.7%.
The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
