Bitcoin shows signs of collecting strength after a week of lateral movement, with two key on-chain indicators suggesting a potential breakout.
summary
- Bitcoin’s MVRV ratio has converged to 365 days of MA. This is a historically continuous pattern of rallying.
- The futures market shows signs of cooling, suggesting a healthier and less speculative BTC rally.
- Technical indicators show a close-to-support integration with potential breakout brewing.
In an analysis on July 31, the crypto-contributor coincidence is now at 2.2 and converging to a 365-day moving average, marking the market value as a realised value ratio. Historically, such periods of convergence have often preceded Bitcoin (BTC) rallies, as metrics tend to climb towards overestimated zones of nearly 3.7.
Setup, a coincidence note is similar to how stocks don’t hover around long term averages in the long term before they make a critical move.
Bitcoin Futures Market Cool
Another July 30 analysis by Cryptoquant analyst Shayanmarkets highlighted the cooling trends in the Bitcoin futures market. Despite recent BTC trading of nearly $123,000, the volume bubble map shows the transition from the overheated red zone to a more neutral and cooling area.
Bitcoin futures volume bubble map. Credit: Cryptoquant
This steady rise in Bitcoin exceeds $100,000 and this reversal in speculative activity suggests that natural demand is driving the market more by its natural demand than excessive leverage that could pave the way for a fresh bullish trend.
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Over the seven-day range of $115,184 to $119,568, Bitcoin is $118,313 at the time of writing, an increase of 0.1% that day. It’s down 3.7% from its all-time high of $122,838 on July 14th, but has risen 10% over the past month, indicating resilience during the recent consolidation phase.
Bitcoin Technical Analysis
On the daily charts, Bitcoin hugs the 20-day Bollinger Band Middle Line. This currently represents moderate bullish pressure at around $118,327. The band itself has been narrowed in recent sessions, indicating a reduced volatility and a possible breakout as compression often precedes expansion.
Bitcoin Daily Chart. Credit: crypto.news
The relative strength index is 59.32, which is neutral. It is not in the territory that was bought yet, but it still shows some bullish momentum. Bitcoin’s next move could depend on its ability to overcome the $119,900 barrier, the top edge of the Bollinger band.
If this level is cleared, there may be opportunities for new gatherings and moves above $123,000. On the back, the collapse below $116,700, a low band boundary negates the current bullish structure and opens the door to deeper corrections.
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