Cryptocurrency investors are still enjoying this week’s bullish price action after Bitcoin (BTC), Ether (ETH), and a handful of altcoins 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 new round of bullish predictions among crypto enthusiasts on Twitter.
Although the week-long rally has helped boost investor sentiment, several analysts are warning traders not to get too far ahead of themselves as the market continues to offer some red flags worth paying close attention to.
An Imminent Setback Is Coming
Bitcoin’s rise above $24,000 has officially confirmed the breakout of the previous trading range between $18,000 and $22,500, according to market analyst Caleb Franzen, who shared the following graph indicating the situation that the market is currently facing.
The analyst said:
“In any case, I think the next pullback will be a major test into this bear market. Will buyers aggressively step into a pullback or capitulate?
Whale wallets are still dormant
One reason to be wary of the capacity of the current rally is the lack of whale wallet activity, according to on-chain research firm Jarvis Labs.
The red and orange dots on the BTC divergence chart represent buying activity by both large and small whale wallets at different times. As shown in the highlighted red box, whale wallet activity has been almost non-existent in recent months as Bitcoin trended lower.
Data from Jarvis Labs also showed that larger entities have yet to return to active buying, with the chart below showing the change in whale holdings of BTC.
The Jarvis Labs team said:
“We want to see this colored dot pattern start to move up and to the right. If we do, it will 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 get excited about a rally that extends beyond liquidity sitting around $28,000”, instead suggesting that “for now, the band below $25,000 seems most likely.”
Longer timeframes remain bearish
The change in stance over the past week was acknowledged by market analyst and swing trader il Capo de Crypto, who noted that “Without a doubt, the trend of the shorter time frames is bullish.”
But before everyone jumps on this rally, il Capo of Crypto too public the chart below warning that the “macro trend for longer time frames remains bearish and this is another lower high.”
Trader said:
“Bearish confirmation on the shorter time frame is below $22,000. The main target remains $15,800-16,200.”
The total cryptocurrency market capitalization currently stands at $1.062 trillion and the dominance rate of Bitcoin is 42.7%.
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