Bitcoin has survived an oil shock and returned toward $65,000, but Glassnode suggests this recovery may fall short.
After climbing back toward $65,000, Bitcoin short sellers have mostly stepped aside and U.S. spot ETFs are buying again. Even so, Glassnode says the rebound still hasn’t proved the bear market is over.
The blockchain analytics firm noted in a recent market overview that Bitcoin beat both U.S. and European stocks for a second week, even as oil prices jumped during the latest Iran escalation.
The market still faces plenty of pressure, though. The 10-year U.S. Treasury yield remains near recent highs, while tight monetary policy continues to weigh on risk assets.
Read also: Bitcoin’s Bear Market May End Before the Four-Year Cycle Predicts
Therefore, the next major test will be the area of $69,000, which the analysts mentioned as the level, at which the average price of Bitcoin purchases over the past five months took place. Glassnode said:
“This is still a bear-market rally until the market proves otherwise, and the proof has an address. The squeeze has done everything a squeeze can do: hedges are off, shorts are closed, funding is calm, and the ETF channel has flipped from drag to bid. What it has not done is clear the overhead.”
If Bitcoin clears $69,000, there’s “an air pocket” all the way to $84,000, which could make the move higher fairly quick. the analysts said. But if it gets rejected, attention would likely shift back to the $63,000 area, where about 10% of Bitcoin’s supply last changed hands.
Buyers Are Back, but Not Everywhere
However, there are also some positive indicators. For instance, exchange inflows have slowed from their June early peak, ETF flows are now positive, and there’s much less demand for downside protection in the options market than ever before, as noted in the report.
Funding in perpetual futures has also stayed below neutral, so the rally doesn’t appear to be driven by traders piling into excessive leverage.
Nonetheless, as Glassnode notes, the buying activity has been largely limited to crypto wallets owning between 1,000 and 10,000 BTC▲$62,630.00, and mid-size hodlers are now selling. As Glassnode explained, “breadth is the missing on-chain ingredient.”
Read more: Bitcoin Hits Monthly High Above $66,000 as Five-Day ETF Inflows Reach $727M
