Categories: Crypto News

Bitcoin Price Drops to $37K, Analysts Wary of Calling ‘Trend Change’

Bull market optimism returned to the cryptocurrency market on July 26 after bitcoin (BTC) price rose above the $40,000 level for the first time in six weeks.

Today’s rally to $40,581 was a continuation of the July 25 breakout, which saw BTC price rocket to $48,110 as a result of a short squeeze on Binance, which resulted in nearly $500 million of shorts liquidated in just two minutes was given.

Data from Cointelegraph Markets Pro and TradingView shows BTC hit an intraday high of $40,581 on Monday and then bounced back to $37,500 as bulls flip back to support this resistance area in preparation for another move. want to do.

BTC/USDT 4-hours chart. Source: trading view

While a move higher marks a trend change and has led some analysts to declare that the bull market is back on track, on-chain data and perpetual funding rates do not fully agree with this view. Especially when one considers that the current breakout could only be the result of a massive small squeeze.

Factors That Can Rule a Bull Market

According to Eli Le Rest, partner at digital asset management firm ExoAlpha, a recent rumor that Amazon will accept cryptocurrency payments has the potential to have the same effect as PayPal’s 2020 revelation that it will integrate cryptocurrencies. Le Rest said that if Amazon’s news turns out to be true, it “could be a catalyst to ignite a bull run in the second half of 2021.”

As the price of bitcoin was pushed above the $35,000 level on July 25, according to Le Rest, “over a billion dollars of shorts were liquidated in the past 24 hours, with a massive amount in less than 1 hour.” But it was liquidated”. “Current market movements may be sustained during the week by volume coming from players waiting for a more directional trend on bitcoin from the end of May.”

Le Rest said:

“For this directional trend to be valid, bitcoin needs to break out of the $30,000-$40,000 range that it has been stuck in for 2 months. Bitcoin sustaining above the $40,000 level indicates a “bear market”. is over and the bull-run can resume.

If bitcoin is able to maintain its current momentum, Le Rest said, “as many expected, bitcoin could be back on track with the stock-to-flow model and reach $100,000 by the end of the year.” “

On-chain data is not that fast

There is a need to be extremely bullish and data from Glassnode shows that many bearish threats are legitimate.

When analyzing the directional bias of the futures market, Glassnode found that “consistent funding rates continue to trade negative,” which “suggests that the net bias is less bitcoin.”

Bitcoin Futures Perpetual Funding Rates for all exchanges. Source: glassnode

Glassnode said:

“This metric in particular helps us identify that Monday’s price rally is correlated with an overall short squeeze, with funding rates continuing to trade at even more negative levels despite a price rally of +30%. “

Glassnode also pointed to bitcoin’s on-chain activity, highlighting that “in contrast to volatility in spot and derivatives markets, transaction volume and on-chain activity remain extremely calm.”

Bitcoin unit-adjusted total transfer volume. Source: glassnode

Overall, how on-chain transfer volume responds to recent price action in bitcoin will provide a better insight into where the market is headed, but as Glassnode noted, “it remains to be seen how in response.” Whether or not on-chain volume starts to take off. As for the recent volatile price-action.”

Connected: DeFi Token Posts Double Digit Gains After Bitcoin Rebounds Above $39,000

Altcoins Follow Bitcoin’s Lead

Daily cryptocurrency market performance. Source: Coin360

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

Ether (ETH) rose 11% to a daily high of $2,433, while Dogecoin (DOGE) was up 7% and traded at $0.208.

Other notable gains include a 64% gain for Strike (STRK), a 55% rally in Venus (XVS), and a 20% breakout in VeChain Thor (VTHO) and Anker (ANKR).

The total cryptocurrency market cap now stands at $1.46 trillion and bitcoin has a dominance rate of 47.4%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.

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