Bitcoin spikes above $61,000 as on-chain data shows positive bias

Bitcoin price rises for a second consecutive day, but remains within its broad consolidation trend between $57,000 and $62,000.
Coinglass's long-to-short ratio stands above one, suggesting a mild bullish sentiment.
On-chain data shows that wallets between 100 and 1,000 BTC are accumulating.

Bitcoin (BTC) rises on Tuesday for a second consecutive day, popping above $61,400 during the Asian session, as market sentiment improves and amid encouraging signs from on-chain data. However, the largest crypto asset by market capitalization remains in a broad consolidation phase as it has traded between $57,000 and $62,000 for the past ten days, struggling to break resistance in the upper range of the band.

Daily digest market movers: Bitcoin whales add to holdings

Santiment data shows that Bitcoin whale wallets holding between 100 and 1,000 BTC have accumulated 94,700 BTC in the past six weeks. This represents a 2.44% rise, indicating that this cohort of stakeholders is loading up despite the recent fall in Bitcoin's price from $70,000 to $49,000 from the end of July to early August, which has shaken many traders out of crypto.

Bitcoin 100 to 1000 holdings chart

According to Coinglass data, US spot Bitcoin ETFs experienced a mild inflow of $62.10 million on Monday. Net flows can help gauge investors' sentiment towards Bitcoin, but when these are small – like this at the start of this week so far – they are less significant, considering that the total Bitcoin reserves held by the 11 US spot Bitcoin ETFs are at $54.25 billion. Still, ETFs are accumulating three straight days of inflows.

Bitcoin Spot ETF Net Inflow (USD) chart

Coinglass's long-to-short ratio stands at 1.11. This ratio suggests a mild bullish sentiment in the market as the number above one suggests that more trades anticipate the price of Bitcoin will rise.

Bitcoin long-to-short ratio chart

CryptoQuant's Inter-exchange Flow Pulse (IFP) index measures Bitcoin flows on spot and derivative exchanges. These flows provide insights into market trends. A rise in this index indicates more Bitcoin is flowing into derivative exchanges, which is generally considered a sign of a bullish phase. On the contrary, a fall in the index suggests Bitcoin is flowing out of derivative exchanges, a sign of a bearish phase. In BTC's case, the index trades above the 90-day simple moving average, indicating that bulls are regaining strength.

Bitcoin Inter-exchange Flow Pulse chart

Japanese public company Metaplanet bought over $3.4 million worth of Bitcoin per August 20 notice. This follows Metaplanet's recent decision to adopt Bitcoin as a reserve asset to address risks related to Japan's significant debt and Japanese Yen (JPY) volatility. Metaplanet's move could pave the way for broader adoption of Bitcoin and cryptocurrencies, among other companies, and its total holding is 303.09 BTC worth $18.42 million.

*Metaplanet purchases additional 57.27 $BTC* pic.twitter.com/jvk3heTCOA
— Metaplanet Inc. (@Metaplanet_JP) August 20, 2024

Technical analysis: BTC nears key resistance

Bitcoin price continues to consolidate between $57,115 and $62,066, the Fibonacci retracement levels of 38.2% and 61.8%, respectively, drawn from the high on July 29 to the low on August 5. On Tuesday, it trades slightly higher by 2.33% to $60,828 at the time of writing.

Suppose BTC rises back to the 61.8% Fibonacci retracement at $62,066. In that case, it may find some resistance at this level, as it aligns with the previously breached trendline and the 100-day Exponential Moving Average of around $62,217, making it a key resistance zone.

If it does not surpass $62,066, it could drop to $57,115 before potentially declining by 19% to revisit the $49,917 daily support level.

On the daily chart, the Relative Strength Index (RSI) is flipping above its neural level of 50, and the Awesome Oscillator (AO) still trades below its neutral level of zero. For bearish momentum to sustain, both indicators must remain below their neutral levels.

BTC/USDT daily chart

On the other hand, if Bitcoin's price can close above $62,066, a rise towards the August 2 high of $65,596 would be on the cards as it would set a higher high on the daily chart. This could lead to a further 6% price increase to test the weekly resistance at $69,648.

Cryptocurrency metrics FAQs

What is circulating supply?

The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.

What is market capitalization?

Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.

What is trading volume?

Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.

What is funding rate?

Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.

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