Bitcoin (BTC) Price Tops $39K as Chart Displays Patterns of Bull Market Entry

According to analysis from Cryptoquant, the current bitcoin chart shows similarities to previous patterns of a bull market entry. The on-chain data provider highlighted that the BTC chart patterns resemble the early bull market in 2017 and 2021, sparking speculations over whether a fresh rally was imminent.

BTC Prices Skyrocket

The Cryptoquant bull cycle theory seems to be unfolding after BTC experienced a shocking rally on July 26, gaining over 15% in three hours. The price shot up from the $34K level to hit a high of $39,723 for the first time since mid-June.

The rally came as sentiment turned bullish after the recent market sell-off that took BTC prices below the $30K support. The price jump sparked a resurgence in the broader crypto market, with top coins such as ETH and ADA gaining over 5% in the past 24 hours.

According to Alex Brammer of Luxor Mining, the surge in prices is partly attributable to the recent bullish comments from Elon Musk during the B conference held last week.

Other bullish headlines that may have boosted the BTC price include Amazon’s decision to hire blockchain experts, a move that suggests the e-commerce giant could be looking to roll out support for cryptocurrencies. In other bullish news, Jack Dorsey revealed last week that Twitter plans to make crypto a big part of its investment strategy in the future.

BTC Price Spike a result of Over-leverage Shorts

The bitcoin bulls attempted a retest of the $40K resistance for the first time in weeks in an overnight shock rally.

The quick surge in prices sparked a violent short squeeze as prices soared above the $35K. Many traders who had bet on BTC prices plummeting further were forced to exit their short positions to minimize losses, helping to pump prices even higher.

According to Vijay Ayyar, head of business development at Luno exchange, the remarkable jump in prices was likely due to over-leverage shorts.

Respected analyst Willy Woo had predicted a short squeeze in a recent tweet, claiming that a breakout was imminent if BTC holds on to key support levels.

9 more hours from daily close. If price holds these levels, RSI breakout will confirm. RSI leads price breaks with quite high reliability.

Meanwhile on-chain fundamentals: supply shock is in play and only getting stronger. A short squeeze setup. https://t.co/cGtdSk0ibw pic.twitter.com/bw5eSOofg7

— Willy Woo (@woonomic) July 23, 2021

What is Next for the BTC Price?

Bitcoin is currently correcting some of its recent gains and is trading just below the $38K level, per data from coinmarketcap. The top cryptocurrency faces an initial resistance near $39.5K, while the main resistance sits at $40K.

Should the bulls hold on to recent gains and close above $39,500, then bitcoin could log a breakout rally toward $42K in the near term.