Bitcoin price fell to $37,000, making analysts wary of calling it a “trend change”

After Bitcoin on July 26, bull market optimism returned to the cryptocurrency market (Bitcoin) The price rose above $40,000 for the first time in six weeks.

Today’s rebound to US$40,581 is a continuation of the breakout on July 25, when Binance’s BTC price soared to US$48,110, as short positions of nearly US$500 million were liquidated in just two minutes.

Data from Cointelegraph Markets Pro and Transaction view It shows that BTC soared to an intraday high of $40,581 on Monday, and then fell back to $37,500, because the bulls hope to reverse the resistance zone back to the support level in preparation for further higher.

BTC/USDT 4-hour chart. source: Transaction view

Although going higher is a sign of trend changes and has prompted some analysts to announce that the bull market is back on track, On-chain data Perpetual financing interest rates do not fully agree with this view. Especially when people think that the current breakthrough may just be the result of a massive short squeeze.

Factors that may reignite the bull market

According to Élie Le Rest, a partner of digital asset management company ExoAlpha, the recently denied rumors that Amazon will accept cryptocurrency payments may have an impact similar to what PayPal disclosed in 2020 that it will integrate cryptocurrencies. Le Rest stated that if Amazon’s news is true, this “may become a catalyst to ignite a bull market in the second half of 2021.”

Le Rest stated that as the Bitcoin price broke through the $35,000 level on July 25, “more than $1 billion of short positions have been liquidated in the past 24 hours, most of which took place in less than one hour.” Said, “As the trading volume of participants who have been waiting for a more directional trend in Bitcoin since the end of May, the market trend this week may continue.”

Le Rest says:

“In order to verify this directional trend, Bitcoin must break through the range of USD 30,000 to USD 40,000 it has been trapped for 2 months. Maintaining Bitcoin above USD 40,000 will indicate that the “bear market” is over and the bull market may resume. ”

Le Rest stated that if Bitcoin can maintain its current momentum, “As many people expected, Bitcoin may return to the stock-to-flow model and reach the $100,000 mark by the end of the year.”

The data on the chain is not so promising

It is necessary to be careful not to be overly bullish. Glassnode’s data shows that some bearish threats are still valid.

When analyzing the direction deviation of the futures market, Glassnode found that “perpetual funding rates continue to be negative”, which “indicates that the net deviation is still shorting Bitcoin.”

Bitcoin futures perpetual funding interest rates on all exchanges. source: Glass node

Glassnode says:

“This indicator is particularly helpful for us to determine that Monday’s price increase may be related to the overall short contraction. Although the price has risen by 30%, the financing interest rate continues to be at a more negative level.”

Glassnode also pointed to Bitcoin’s on-chain activity and emphasized that “in stark contrast to the volatility of the spot and derivatives markets, the transaction volume and on-chain activity are still very quiet.”

The adjusted total transfer volume of Bitcoin entities. source: Glass node

In general, how the on-chain transaction volume responds to Bitcoin’s recent price movements will help to better understand the market’s direction, but as Glassnode pointed out, “Whether on-chain transaction volume starts to pick up remains to be seen. Recent volatile price movements.”

related: After Bitcoin rose above $39,000, DeFi tokens recorded double-digit gains

Altcoins follow in the footsteps of Bitcoin

Daily cryptocurrency market performance. source: Coin 360

Bitcoin’s recovery above $40,000 also helped trigger a strong rebound in most altcoins.

Ether (Ethereum) Rose 11% to a daily high of $2,433, while Dogecoin (dog) Rose 7%, and the transaction price was $0.208.

Other notable gains include Strike (STRK) up 64%, Venus (XVS) up 55% and VeChain Thor (VTHO) and Ankr (ANKR) up 20%.

The overall market value of cryptocurrencies is now $1.46 trillion, and Bitcoin’s dominance rate is 47.4%.

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