Everything Was Set for a Massive Bitcoin Rally Last Week—What Went Wrong?

Bitcoin dropped below $64k last Monday and continued downward for most of the week. In the end, it closed with losses exceeding 3%.

Two weeks ago, the apex coin gained more than 2%. However, a closer look at price action shows that, except Monday, BTC did not register any session with strong upticks. Additionally, it failed to flip a critical mark it traded below over the last fourteen days.

Away from the price movements, several on-chain data flipped positive. One such is a modest rise in buying. Recent data from Glassnode shows that profit/loss states are rising. While the increase is moderate, it shows more traders are selling at a profit.

Interestingly, paying closer attention to how this metric is rising offers insight into what to expect in the coming weeks. Recall that the change is not rapid, which means there are no massive gains that may lead to a state of euphoria across the market.

To put this into perspective, when the market sees massive gains and a rise in profit/loss, it normally signals an impending correction. Such a trend is absent at the time of writing, suggesting that the crypto market may see further increases in the coming days.

It is worth noting that this is not the only green on-chain metric. The capital flow indicator is also green. Futures indicators were also positive, showing rising interest in the sector.  Additionally, options saw a trickle of funds inflows.

Bitcoin ETFs Saw Massive Inflow

Aside from the highlighted indicators, exchange-traded funds also showed bullish signs. For example, two weeks ago, the funds tied to BTC posted a net inflow of $853 million.  Looking at data from SoSoValue, it was the highest inflow since April.

Based on previous trends that saw the asset register a notable influx in two or three weeks, the consensus was that the positive trend would continue into the next week.

Away from ETFs, spot also had a moderate rise in buying volume, as investors resumed aggressive buying. Data from CryptoQuant shows that exchange reserves plummeted between Aug 3 and 7, suggesting that some long-term holders stacked up and moved out of the trading platforms.

Breaking down the buying, whales’ involvement becomes more evident. Starting Aug 3, Sharks reduced their selling to one of the smallest in months. The Humpbacks entered the market and scooped up over 19k BTC. The numbers climbed the next day and doubled on the 7th.

While selling from other cohorts continued, the buying largely outweighed the selling. For example, on the 4th, Crabs’ selling exceeded 6k BTC, and sharks sold over 21k units. They were the only group that sold during that session, and the buys exceeded 50k. Doing the math, there’s a greater volume from those stacking up.

All these indications were a sign of something bullish to come. The set period was last week, but from all perspectives, it did not happen as expected. The global cryptocurrency market shed a tiny fraction as the apex coin posted losses exceeding 3%.

What Went Wrong?

The Glassnode assessment noted that the fundamentals were significantly low. Before last week, there was no notable news that could trigger a massive increase. Data from CoinMarketCap showed that sentiment across the crypto market was not positive.

In a nutshell, the weeks before the previous one offered no massive news. Ongoing conflicts in the Middle East overshadowed events in the US. Investors were bored with the current state of the market, and there were no antidotes for the situation.

Conditions worsened last week following the BLS release of economic data. One of the biggest was the CPI report, which came in negative as expected. The release resulted in another muted performance by Bitcoin.  Additionally, the asset retraced on Friday as the apex coin saw Options close with put calls holding notable profit.

Summing trading actions during the previous intraweek session, the apex coin lost over 3%. While the asset failed to perform as many expected, attention is now on the next five days.

Will Bitcoin Surge This Week?

The apex coin up by almost 3% over the last 48 hours. It is easy to conclude that the uptick may continue over the next five days.

Based on fundamentals, the asset will remain largely positive over the next few days, except Thursday when weekly jobless claims roll in. If there are no other negative surprises this week, the likelihood of further price increases remains high.

Away from the releases, Bitcoin spot ETFs saw a massive inflow on Monday. A closer look at the data shows a net inflow of almost $300 million. The figure is notably higher than anything seen in the last three months. The improvement in ETFs is currently bolstering conviction of further price hikes.

Interestingly, the weekly chart aligns with this prediction. A closer look at price action shows that since the massive dip a few weeks ago, BTC has consolidated. Over the last four weeks, it has traded mostly below $65,800 while maintaining the $62k support.

Focusing on price action over the last three weeks also reveals a pattern that correlates with the consolidation. The session starting July 27 ended with notable losses while the next one was green. The third session was red, which means if BTC will maintain rangebound movement, it must surge this week.

However, if current conditions remain the same, the asset will move by only $1k-$2k. The likelihood of this happening rises considering that investors are still bored.

The bollinger band on the 1-day timeframe also aligns with the assertion of a small move, as the upper band lies slightly above $65k. Nonetheless, the pivot point suggests a slim chance of an attempt at $67k; the first pivot resistance.

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