Bitcoin [BTC] It is back above $ 23,000 for the first time since June 13, thanks to a strong bullish performance over the past seven days. Eagle-eyed BTC enthusiasts may have noticed that the latest rally pushed Bitcoin out of its tight range in which it had been stuck for four weeks.
The next critical level BTC faces is above $ 28,000. However, are market conditions conducive to taking the coin to its next critical level? Let’s find out.
Bitcoin’s latest performance suggests that investors are now dealing with the “fear of getting lost” Bitcoin.
Also, the Fear and Greed Index was at 31, which is still in fear territory, but can be seen as a huge improvement over last month.
By context, the same index was in extreme fear territory and stood at a low of nine about four weeks ago.
However, an improvement in the score does not necessarily mean that there is enough demand to bring BTC back to previous levels.
ETFs are still on the sidelines
There were strong outflows from 3IQ Coinshares and Purpose BTC ETFs during Bitcoin’s sharp crash in the second week of June. ETFs themselves have maintained relatively low activity since then, but their build-up would likely fuel the recovery to May levels.
Source: Glassnode
We have to take into account that strong demand could also come from elsewhere. Foreign exchange inflows and outflows can provide a rough idea of the level of demand for Bitcoin currently on the market.
According to data from Glassnode, foreign exchange outflows increased from 14,542 BTC to 42,390 BTC between July 16 and 19. On the other hand, foreign exchange inflows increased from 16,313 BTC to 39,329 BTC over the same period.
Source: Glassnode
Foreign exchange outflows were significantly higher than inflows. However, the gap between foreign exchange inflows and outflows was relatively small at press time.
This suggests that BTC’s demand may not be as pronounced. Despite the low demand, the good news is that whales have been hoarding Bitcoin in the past few days.
The number of addresses with more than 10,000 BTC stood at 99 addresses as of July 19. This represents a three-address increase from July 4th.
Source: Glassnode
The only time Bitcoin had more addresses worth over 10,000 BTC was during the mid-June drop. Perhaps this is a sign that whale sentiment is improving at current price levels, probably after waiting for the worst to pass.
However, Bitcoin still has a lot of ground to cover to return to its May levels, even after its latest rally. There will certainly be some profit-taking along the way.
