Bitcoin’s $66,000 price breakout survives continued US-Iran escalation, but a bigger test looms

Bitcoin climbed above $66,000, extending its advance as exchange-traded fund inflows and a sharp drop in balances on major crypto exchanges eased some of the selling pressure that has weighed on the market since May.
Data from CryptoChoshows that the largest cryptocurrency traded as high as $66,277 and was changing hands near $66,181 as of press time, up about 3.3% from its previous close.
The move took Bitcoin to its highest level in more than a month and placed it above the range that contained several recovery attempts during July.
The advance also forced leveraged traders out of their positions. CoinGlass data showed that 78,126 traders were liquidated over 24 hours, with total liquidations reaching about $260.3 million.
Those liquidations helped amplify the price move as exchanges automatically closed positions that could no longer meet margin requirements. However, the size of the wipeout does not establish whether the rally was led by durable spot-market demand or by traders unwinding leveraged bets.
That distinction is becoming central to Bitcoin’s latest recovery. Institutional flows and daily exchange movements have improved. Still, longer-term indicators show that investors are not yet accumulating Bitcoin or transferring new stablecoin purchasing power onto trading platforms at a rate associated with sustained advances.
ETF inflows provide support after weeks of withdrawals
US spot Bitcoin ETFs recorded five consecutive sessions of net inflows, attracting about $727 million over the period, according to SoSoValue data.
The streak, the longest since early May, marked a shift from the persistent withdrawals that accompanied Bitcoin’s second-quarter decline.
Bitcoin Inflow Streak (Source: SoSo Value)
Simon-Peter Massabni, head of business development at XS.com, told CryptoChothat the renewed inflows have helped support Bitcoin after several previous recovery attempts lost momentum when ETF demand quickly faded.
Still, five positive sessions are not enough to establish that institutional investors have shifted from intermittent buying toward sustained accumulation.
The recent inflows also recover only a fraction of the capital that left crypto investment products during the preceding two months. Bitcoin and Ether funds recently ended eight weeks of combined outflows totaling about $9.46 billion.
Massabni said Bitcoin would need to attract capital at a faster pace and over a longer period to sustain the upward move and recover more of the ground lost during the recent selloff.
That leaves the rally’s durability dependent on whether the current streak develops into materially stronger and more persistent demand.
Exchange withdrawals reduce selling pressure, but buying power remains weak
The improvement in ETF demand has been accompanied by a sharp withdrawal of Bitcoin from major exchanges, offering another source of near-term support for the price.
CryptoQuant data showed that about $686 million worth of Bitcoin left Binance, Bybit, Coinbase and HTX on July 20.
Bitcoin Exchange Netflow (Source: CryptoQuant)
Per the data, Binance accounted for roughly $570 million of the total, its largest daily net outflow since April. Bybit recorded about $65 million in withdrawals, while Coinbase and HTX posted outflows of approximately $48 million and $3 million, respectively.
Moving Bitcoin away from exchanges can reduce the amount immediately available for sale, particularly when withdrawals occur across several trading platforms at the same time. If the coins remain outside exchange wallets, the decline in available supply could help limit short-term selling pressure.
However, CryptoQuant analyst Axel Adler said the one-day movement does not yet amount to evidence of sustained accumulation.
Bitcoin’s 30-day exchange net-flow indicator remains close to its baseline and continues to show a slight bias toward inflows. That means the July 20 withdrawals have not been large or persistent enough to reverse the broader trend.
Adler also noted that the deep and sustained exchange outflows associated with accumulation periods in 2023 and 2024 remain absent. As long as the indicator stays near or above its baseline, a substantial amount of Bitcoin remains on exchanges and available for sale.
Moreover, the buy side presents an additional constraint.
CryptoQuant’s 30-day moving average of stablecoin net flows has remained negative and recently dropped below -$100 million, indicating that dollar-pegged tokens are leaving exchanges faster than they are arriving.
Stablecoins represent much of the readily available capital traders use to purchase Bitcoin. Their continued withdrawal therefore weakens the market’s ability to absorb supply and support repeated advances.
That shortage of purchasing power may become more important as Bitcoin’s rebound puts recent buyers back into profit.
Data from Santiment shows that BTC’s 30-day market-value-to-realized-value ratio has moved back above zero, meaning wallets that accumulated Bitcoin over the past month are, on average, holding unrealized gains.
Bitcoin MVRV Ratio (Source: Santiment)
The reading is not yet at levels normally associated with an overheated market. However, the shift above neutral removes some of the pressure that previously discouraged short-term holders from selling and increases the possibility of profit-taking if the recovery begins to lose momentum.
Taken together, the indicators show a market benefiting from lower immediate sell-side pressure while still lacking a comparable improvement in buying liquidity.
That imbalance could become more consequential if profitable short-term holders begin supplying coins back to the market before stablecoin inflows recover.
Oil disruption adds another test for Bitcoin’s recovery
The shortage of crypto-native buying power is not the only constraint facing Bitcoin. The renewed fighting in the Middle East is keeping oil supplies under pressure, raising the risk that another increase in energy prices could revive inflation concerns and restrict the broader liquidity available to risk assets.
On July 21, US Central Command said it completed another round of strikes against Iran late July 20, targeting military command centers, maritime capabilities, missile and drone launch sites and air-defense systems.
CENTCOM said the operation was aimed in part at reducing Iran’s ability to attack commercial vessels traveling through the Strait of Hormuz.
The strikes came as Iran continued its attacks against US and allied interests in the region. Iranian parliament speaker Mohammad Bagher Ghalibaf also signaled that Tehran remained skeptical of Washington’s stated interest in ending the conflict, suggesting that Iranian authorities were preparing for continued military pressure.
Still, diplomatic efforts are proceeding alongside those exchanges. Iran has reportedly received a mediator-backed proposal for a 10-day ceasefire with the United States, although fighting has continued and there is no indication yet that the proposal will produce a lasting agreement.
That leaves the Strait of Hormuz at the center of the market’s concerns. Although commercial vessels continue to transit the waterway, flows remain well below their pre-war levels, keeping a significant portion of Persian Gulf energy exports vulnerable to further disruption.
Oil markets have begun pricing these events as Brent crude fell about 2% to $88 a barrel as traders assessed the proposed ceasefire.
Goldman Sachs argued that Brent could climb above $120 a barrel in the fourth quarter if disruptions through the Strait of Hormuz persist and Persian Gulf supplies remain constrained.
The downside risk for Bitcoin is what a renewed oil surge could mean for inflation and monetary policy.
A prolonged energy shock would complicate the outlook for interest rates by raising transportation, production and consumer costs at a time when markets are already sensitive to inflation. Higher inflation expectations could keep government bond yields and borrowing costs elevated, reducing the pool of speculative capital available to Bitcoin and other risk assets.
That creates an additional hurdle for a Bitcoin market already showing limited stablecoin purchasing power.
While the latest rally may be benefiting from ETF inflows and reduced near-term exchange supply, another sustained rise in oil prices could make the external liquidity environment less supportive just as Bitcoin needs stronger demand to extend its recovery.
Bitcoin’s next test sits near $72,200
For now, Bitcoin remains inside what CryptoQuant analyst Axel Adler described as a transitional market range, bounded by an adjusted market cost basis near $57,700 and a recovery level around $72,200.
Bitcoin’s Adjusted Realized Price (Source: CryptoQuant)
The move above $66,000 has pushed Bitcoin further away from the lower end of that range, but the asset would still need to gain roughly another 9% to reach the level Adler associates with a broader recovery.
However, getting there may require more than the conditions that supported the latest advance. ETF demand has returned, exchange withdrawals have reduced some immediate selling pressure, and short-term holders are back in profit.
Yet stablecoin flows continue to show limited purchasing power, while the threat of higher oil prices keeps the external liquidity backdrop uncertain.
That leaves the rally in a stronger position than it was earlier in July, but still without the combination of sustained capital inflows and improving macro conditions that would provide clearer confirmation of a lasting breakout.
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