Bitcoin faces resistance at $ 40,000 but momentum remains intact
July 27, 2021
July 27, 2021
After the price of Bitcoin (BTC) surged above $ 40,000 for the first time in more than six weeks on July 26, the bull’s confidence in the cryptocurrency industry rose again. Today’s surge to $ 40,581 was a resumption of the July 25th breakthrough that saw the BTC price on Binance soar to $ 48,110 after a short squeeze over $ 500 million in short in just two minutes Positions destroyed.
BTC rose to an intraday high of $ 40,581 on Monday before falling to $ 37,500, according to CoinGecko data, as the bulls attempt to convert that resistance zone into support in anticipation of a bigger surge.
While the upside seems to be a turnaround, leading some experts to declare that the bull market has resumed, on-chain statistics and ongoing funding costs do not fully support this argument. Mainly because the latest breakthrough could simply have been the result of a huge short squeeze. According to Élie Le Rest, a partner in digital asset administration firm ExoAlpha, the latest debunked speculation that Amazon will accept payments in cryptocurrency could have the same impact as PayPal’s 2020 announcement that it would embed cryptos.
If the Amazon rumor is true, Le Rest believes it “Might be the spark to trigger a bull market in the second half of 2021. Over $ 1 billion in short positions have been liquidated in the past 24 hours, with much of the liquidation occurring within an hour.” according to Le Rest who also said that “The recent market move could continue throughout the week with orders coming in from players who have been waiting for a clear trend in Bitcoin since the last week of May.”
“To confirm this upward trend, Bitcoin must cross the $ 30,000 to $ 40,000 range that it has been locked in for the past two months.” Le rest added. Keeping the price of Bitcoin above $ 40,000 would suggest the “Bear market” has ended and the bull market could resume. In addition, according to Le Rest, “Provided Bitcoin maintains its upward surge, as many predict, Bitcoin could get back on track with the stock-to-flow model and hit the $ 100,000 mark by the end of the year.” Excessive upward movement should be avoided as Glassnode’s evidence shows that numerous downside risks remain real.
When Glassnode looked at the trend in the futures markets, it found that “The eternal financing rates have remained negative” indicates that “The net bias remains short with Bitcoin.” “This indicator particularly helps us to see that Monday’s price rally is likely to be linked to a cumulative short squeeze, with funding rates trading at much more negative levels when prices rise +30 percent.” Glass knot added. Compared to the fluctuations on the spot and futures markets “The transaction volume and the on-chain activity remained fairly calm”, according to Glassnode.
Consequently, the response of on-chain transfer traffic to recent Bitcoin price movements will give us a clearer idea of where the market is headed, but as Glassnode points out, “It remains to be seen whether on-chain volumes begin to improve in response to recent wild pricing activity.” Bitcoin’s surge above $ 40,000 sparked significant gains in other cryptocurrencies. Ether (ETH) rose 11% to a daily high of $ 2,433, while Dogecoin (DOGE) rose 7% to $ 0.208. Strike (STRK) is up 64%, Venus (XVS) is up 55%, while VeChain Thor (VTHO) and Ankr are up 20% (ANKR).