Bitcoin (BTC) closed July above $41,000 in a “bullish engulfing” candle that dramatically upends its previous downtrend.
In a tweet on Aug. 1, investor and entrepreneur Alistair Milne joined many celebrating a classic return to form for BTC price action.
Bitcoin refuses to flip bearish
After seeing three straight monthly red candles in a row, BTC/USD held onto late gains to post a monthly close that few had anticipated.
Despite the dip to $29,000, bears failed to stay in the driving seat as July drew to a close as resistance levels fell and sentiment improved.
“Bullish engulfing on the monthly chart for Bitcoin,” Milne summarized.
A bullish engulfing pattern is a chart pattern that forms when a small red candle is followed by a large green candle, i.e. July, the body of which completely covers or engulfs the body of the previous candle (June).
BTC/USD 1-month candle chart (Bitstamp). Source: TradingView
The move up — and its staying power — have been so surprising that even seasoned hodlers appear confused about what to do next.
On-chain data shows that some long-term holders (LTHs) are in fact selling as BTC/USD rises, something that analyst Lex Moskovski believes corresponds to the “disbelief” stage of a classic market cycle.
Moskovski highlighted the long-term holder spent output profit ratio indicator (LTH-SOPR), which this weekend hit its lowest levels in 2021.
SOPR looks at the value of coins moved in a particular time period to get an impression of profitability of coins being sold. A downtrend towards the neutral 1 value, host Glassnode explains, suggests that profitability among the coins in question is low.
“Some long-term bitcoin holders are selling into this bounce with minimal profit as indicated by LTH-SOPR hitting this year’s low for two days straight,” Moskovski commented.
“This is one of the reasons we’re still at 41k. Disbelief.”Bitcoin LTH-SOPR annotated chart. Source: Lex Moskovski/ Twitter
Bulls meanwhile continue to look for triggers that could send BTC/USD past $42,000 resistance for good, this having seen two tests in the past 24 hours.
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Beyond there, as Cointelegraph noted, little lies in the way until $45,000 and $47,000.
Equally enthusiastic for upside on Saturday was PlanB, the creator of the stock-to-flow price model family, who described Bitcoin’s July close as being a recovery “like clockwork.”
#bitcoin July closing price $41,490 … it bounced from the lows, like clockwork pic.twitter.com/xZIlbaBBqI
— PlanB (@100trillionUSD) August 1, 2021
Stock-to-flow, while currently demanding a Bitcoin price of nearly $100,000, remains valid, with PlanB giving a minimum August close requirement of $47,000.