Bull market optimism returned to the cryptocurrency market on July 26 after Bitcoin (BTC) price surged above $ 40,000 for the first time in over six weeks.
Today’s rally to $ 40,581 was a continuation of the July 25 breakout that saw BTC price soar to $ 48,110 on Binance after a short squeeze resulted in shorts of nearly $ 500 million in only two minutes were liquidated.
Data from Cointelegraph Markets Pro and TradingView show that BTC climbed to an intraday high of $ 40,581 on Monday before falling back to $ 37,500 as the bulls attempt to flip that resistance zone back into support in preparation for further spike.
While the upward move is a sign of a turnaround and has led some analysts to announce that the bull market is back on track, on-chain data and perpetual funding rates do not fully align with this view. Especially when you consider that the current breakout may just have been the result of a massive short squeeze.
Factors that could rekindle the bull market
According to Élie Le Rest, partner at digital asset management firm ExoAlpha, the recently denied rumor that Amazon would accept payments in cryptocurrency has the potential to have an effect similar to that of PayPal’s 2020 reveal to incorporate cryptocurrencies. Le Rest said if the Amazon news turns out to be true, it could be “the catalyst to ignite a bull run in the second half of 2021”.
As Bitcoin price surged above $ 35,000 on July 25, “more than a billion dollars in shorts have been liquidated in the past 24 hours, with most of the liquidation occurring in less than an hour,” Le Rest said who also said, “Current market movement could be sustained during the week by volumes from players who have been waiting for a more directional trend in Bitcoin since late May.”
Le rest said:
“To confirm this directional trend, Bitcoin has to break out of the range of 30,000 to 40,000 US dollars, in which it has been stuck for 2 months. Holding Bitcoin above the $ 40,000 mark would signal that the “bear market” is over and the bull run could resume. ”
If Bitcoin is able to maintain its current momentum, Le Rest said, “Bitcoin, as many expect, could get back on track with the stock-to-flow model and hit $ 100,000 by the end of the year.”
On-chain data isn’t that bullish
Caution is needed to be overly optimistic, and data from Glassnode suggests several bearish threats remain valid.
In analyzing the directional bias of the futures markets, Glassnode found that “perpetual funding rates continued to trade negatively,” which “suggests the net bias that Bitcoin is staying short.”
Glass knot said:
“This metric in particular helps us to see that the price rally on Monday is likely to be associated with a general short squeeze, with financing rates trading at even more negative levels despite a price rally of + 30%.”
Glassnode also pointed to Bitcoin’s on-chain activity, emphasizing that “in direct contrast to the volatility in the spot and derivatives markets, transaction volumes and on-chain activity remain extremely calm”.
Overall, the response of the on-chain transfer volume to recent Bitcoin price movements will provide a better insight into how the market is performing, but as Glassnode noted, “it remains to be seen whether the on-chain volume will increase in response”. on the recent volatile price movements. “
Related: DeFi tokens see double-digit gains after Bitcoin surged above $ 39,000
Altcoins follow the example of Bitcoin
Bitcoin’s rebound above $ 40,000 also helped spark strong rallies in most of the altcoins.
Ether (ETH) was up 11% to hit a daily high of $ 2,433, while Dogecoin (DOGE) was up 7% and traded at $ 0.208.
Other notable winners include a 64% surge in Strike (STRK), a 55% rally in Venus (XVS), and a 20% breakout in VeChain Thor (VTHO) and Ankr (ANKR).
The total market cap for cryptocurrencies is now $ 1.46 trillion and the dominance rate of Bitcoin is 47.4%.
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