Bitcoin hits $ 40,000 after 6 week absence, but on-chain activity is ‘a bit bearish’

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Bitcoin (BTC) hit $ 40,370 on July 26 as a strong day of gains saw the return of a major price milestone.

BTC / USD 1 minute candle chart (Bitstamp). Source: TradingViewBTC Price Gains Almost 20% Daily

Data from Cointelegraph Markets Pro and TradingView showed BTC / USD hit $ 40,400 before consolidating nearby later on Monday.

The pair had held onto the previous day’s previous gains throughout the day, hovering around $ 38,000 before another surge set in after the Wall Street opened.

Amid understandable excitement from investors who had waited for the rally to finally pick up, Cointelegraph contributor Michal van de Poppe warned against being too bullish at current levels.

“Bitcoin is still showing strength, although sentiment turns to euphoric again as range resistance approaches,” he wrote just before the $ 40,000 hit.

“The trend has changed as the market has created a higher high. I think we are still looking at an HL of $ 34.5-36,000 in the coming weeks, unless we go above $ 41,000.”

This would mark the exit from a long established trading range that has been in place for more than two months.

BTC / USD buy and sell positions (Binance). Source: Hardware indicators / Twitter

A review of the support and resistance levels on Binance’s main exchange at the time of writing showed relatively little buyer activity above $ 36,000, with $ 41,000 still in place for sellers.

Material Indicators, which provides the data for Binance, added that it is important to take into account the moving averages in trying to understand current movements.

Support for 50 DMA, 200 DMA, and 21 WMA are key levels that failed because #BTC was removed from its ATH. Trend Precognition predicted this rise and Bulls recovered the 50 DMA. Now considering overhead liquidity at 40k. If they can handle it, expect more resistance at 200 DMA pic.twitter.com/r131CZWgtv

Hardware Indicators (@MI_Algos) July 26, 2021 On-chain ‘calm’ activity could dampen bulls

While Monday’s gains were impressive, Van de Poppe was not alone in calling for a pragmatic assessment of the Bitcoin market as a whole.

Related: BTC Price Burns Bears On Its Way To $ 40,000: 5 Things To Watch Out For In Bitcoin This Week

In the latest edition of its weekly newsletter, “The Week On-chain”, data analytics firm Glassnode also highlighted the need for on-chain activity to catch up with price performance in order to support the market.

“Overall, on-chain activity remains somewhat bearish and continues to be calm,” analysts wrote.

Perhaps the use of the Bitcoin network is lagging behind the price in this case. Ideally, renewed volatility and constructive price action reignites demand for block space. Otherwise, it may suggest that a framework more caution is needed in the coming weeks. “

The last time Bitcoin interacted with the $ 40,000 mark was during a brief review of lower levels in mid-June.

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