Bitcoin has surged over the past couple of months, with the price of the digital currency rising from $4,000 to over $8,000. But with a significant drop in price today, many are questioning whether this is the peak of Bitcoin’s recent price rise. The value of bitcoin fell by $2,000 to fall to $3,700 at the time of writing.
Analysts are increasingly calling for a significant pullback in the price of bitcoin, as the world’s largest cryptocurrency is suddenly facing growing concerns. On Monday, BTC price dropped to an eight-month low, trading at $37,040, after a sudden drop in the value of ethereum. This post also serves as a reminder to investors not to rush to conclusions around bitcoin price.
The Bitcoin price has been in a steady downtrend since the beginning of this year, reaching its lowest point in the last few days of January. But the price appeared to briefly reverse on February 1, when it reached $37,000—the highest-ever price in the first day of February for the flagship cryptocurrency.. Read more about bitcoin price drop today and let us know what you think.
After Bitcoin (BTC) price rebounded over $40,000 for the first time in over six weeks on July 26, bull market confidence returned to the cryptocurrency industry.
Today’s rise to $40,581 was a continuation of the July 25 breakthrough, which saw BTC price soar to $48,110 on Binance after a short squeeze liquidated almost $500 million in shorts in just two minutes.
BTC soared to an intraday high of $40,581 on Monday before pulling down to $37,500, according to data from Cointelegraph Markets Pro and TradingView, as bulls seek to convert this resistance zone back to support in preparation for a future move higher.
4-hour chart of BTC/USDT. TradingView is the source of this information.
While the move upward gives the appearance of a trend shift, prompting some experts to declare the bull market has resumed, on-chain statistics and permanent funding rates do not completely support this view. Especially because the recent breakthrough may have just been the consequence of a huge short squeeze.
Factors that have the potential to restart the bull market
According to Élie Le Rest, a partner at digital asset management company ExoAlpha, the recently refuted rumor that Amazon will accept cryptocurrency payments may have the same impact as PayPal’s announcement in 2020 that it would incorporate cryptocurrencies. If the Amazon rumor is accurate, Le Rest believes it “may be the trigger to launch a bull run in H2 of 2021.”
“More than a billion dollars of shorts got liquidated in the past 24 hours, with the bulk of the liquidation occurring in less than an hour,” according to Le Rest, who also stated that “the current market move could be sustained during the week by volumes coming from players who have waited for a more directional trend on Bitcoin since the end of M.”
According to Le Rest:
“Bitcoin has to break out of the $30,000-$40,000 area it has been locked in for the last two months to confirm this directional trend. Maintaining Bitcoin’s price over $40,000 would indicate that the “bear market” is finished, and the bull market could restart.”
“As many anticipate, Bitcoin may get back on track with the Stock to Flow model and hit the $100,000 level by year-end,” Le Rest added if Bitcoin maintains its present pace.
On-chain data isn’t that encouraging.
Excessive bullishness should be avoided, as evidence from Glassnode indicates that many bearish risks remain genuine.
When Glassnode looked at the futures markets’ directional bias, it discovered that “perpetual funding rates have continued to trade negative,” indicating that “the net bias remains short Bitcoin.”
All exchanges have a permanent funding rate for bitcoin futures. Glassnode is the source of this information.
According to Glassnode:
“This measure in particular helps us identify that Monday’s price rise is likely linked with an overall short squeeze, with funding rates remaining at even more negative levels despite the price rising by 30%.”
In contrast to the volatility in spot and futures markets, “the transaction volume and on-chain activity remained very quiet,” according to Glassnode.
Total transfer volume adjusted for Bitcoin entities. Glassnode is the source of this information.
Overall, how on-chain transfer traffic reacts to recent Bitcoin price movement will give us a clearer idea of where the market is going, but as Glassnode points out, “it remains to be seen if on-chain volumes start to pick up in reaction to recent wild price-activity.”
Following Bitcoin’s rally over $39,000, DeFi tokens saw double-digit increases.
Bitcoin is followed by altcoins.
Performance of the bitcoin market on a daily basis. Coin360 is the source of this information.
The rise of Bitcoin over $40,000 sparked significant rallies in other cryptocurrencies.
Ether (ETH) increased by 11% to a day high of $2,433, while Dogecoin (DOGE) increased by 7% to $0.208.
Strike (STRK) is up 64 percent, Venus (XVS) is up 55 percent, while VeChain Thor (VTHO) and Ankr are up 20 percent (ANKR).
The total value of all cryptocurrencies is currently $1.46 trillion, with Bitcoin commanding 47.4 percent of the market.
The author’s thoughts and opinions are entirely his or her own and do not necessarily represent those of Cointelegraph.com. Every investing and trading choice has risk, so do your homework before making a decision.
Bitcoin price drop to $37K has analysts wary of calling a ‘trend change’.. Read more about bitcoin price prediction and let us know what you think.
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