Bitcoin is showing signs of a rebound from its consolidation phase, with on-chain analytics firm Glassnode noting that the cryptocurrency is beginning to test resistance levels again. In its weekly report released on July 15, Glassnode highlighted that Bitcoin's inverse correlation with the US dollar is strengthening, positioning it as a dollar-weakness asset rather than a stock proxy.
Dollar Weakness and Shifting Correlations
Bitcoin reacted more sharply than any other major asset after Tuesday's US inflation data came in below expectations, according to Glassnode. After a month of directionless trading near lows, the market is once again responding to positive catalysts. The firm noted that such a strong upward reaction to a single inflation print suggests seller exhaustion and buyers waiting for a trigger.
Meanwhile, Bitcoin's correlation with US equities has weakened since winter, while its inverse correlation with the US dollar has continued to strengthen. Glassnode observed that Bitcoin is now trading as an asset that strengthens during dollar weakness, rather than as an equity alternative. The dollar index and overall market liquidity are becoming key factors for Bitcoin's price action.
Key On-Chain Levels and Short-Term Holder Cost Basis
On-chain indicators show Bitcoin trading above the market-wide average cost basis (realized price) of around $53,000 but below the short-term holder cost basis — the average acquisition price of buyers over the past five months — near $69,000. Glassnode expects a strong reaction when Bitcoin reaches this short-term holder cost basis level, as traders' willingness to sell peaks when price approaches their breakeven point.
If Bitcoin can clearly recover this level, the recovery momentum is likely to strengthen. Conversely, rejection would likely prolong the current range-bound trading. Glassnode also noted that selling by long-term holders has peaked and is declining, with profit-taking subsiding. Buying at the June lows absorbed selling pressure, but a confirmed reversal to an uptrend has not yet materialized.
ETF Flows and Derivatives Signal Caution
Outflows from US spot Bitcoin ETFs have slowed significantly from June's peak, but occasional large outflows in the past week suggest a full recovery is not yet complete. In the derivatives market, traders are unwinding put options hedging downside risk, with the put/call ratio falling to its lowest level this year. However, the lack of accompanying spot market buying remains a concern.
Glassnode stated that a game-changing signal would be a spot-led rally that breaks and holds above the short-term holder cost basis. On the other hand, if long-term holder loss-taking accelerates again or price falls back toward the realized price, the market could return to a range-bound pattern.