Bull market place optimism returned to the cryptocurrency marketplace on Monday after Bitcoin's (BTC) price rallied above the $40,000 level for the first fourth dimension in over 6 weeks.

Monday's rally to $40,581 was a continuation of Dominicus's breakout that saw BTC's price rocket to $48,110 on Binance after a short squeeze resulted in well-nigh $500 million in shorts being liquidated in just ii minutes.

Data from Cointelegraph Markets Pro and TradingView shows that BTC spiked to an intraday high at $40,581 on Monday before pulling back to $37,500 every bit bulls looked to flip this resistance zone back to back up in preparation for a further motion higher.

BTC/USDT four-hr chart. Source: TradingView

While the motility higher has the marker of a trend alter and has prompted some analysts to proclaim the balderdash market is dorsum on track, on-chain data and the perpetual funding rates exercise non fully concur with this bespeak of view — especially when one considers that the current breakout may accept only been the result of a massive brusk squeeze.

Factors that could reignite the bull market

Co-ordinate to Élie Le Residuum, partner at digital asset management house ExoAlpha, the recently denied rumor that Amazon would accept cryptocurrency payments have the potential to have a similar issue as the 2022 revelation from PayPal that it would integrate cryptocurrencies. Le Rest said that if the Amazon news turns out to exist truthful, this "could exist the goad to ignite a bull run in H2 of 2022."

As Bitcoin's toll pushed above the $35,000 level on Lord's day, "more than a billion dollars of shorts got liquidated in the past 24 hours, with the bulk of the liquidation occurring in less than 1 hr," according to Le Remainder, who also said, "the current market move could be sustained during the calendar week past volumes coming from players having waited for a more than directional trend on Bitcoin since the stop of May."

Le Residual continued:

"To validate this directional trend, Bitcoin has to break out of the $30,000–$twoscore,000 range it has been stuck into for two months. Maintaining Bitcoin over the $forty,000 level would signal that the 'bear marketplace' is over and the bull-run may resume."

If Bitcoin is able to maintain its electric current momentum, Le Rest said, "equally many look, Bitcoin could get back on runway with the Stock to Period model and accomplish the $100,000 mark by yr-finish."

On-chain information is non then bullish

Caution is warranted against being overly bullish, and information from Glassnode suggests that several bearish threats remain valid.

When analyzing the directional bias of the futures markets, Glassnode found that "perpetual funding rates have continued to merchandise negative," which "indicates the net bias remains curt Bitcoin."

Bitcoin futures perpetual funding charge per unit for all exchanges. Source: Glassnode

Glassnode said:

"This metric in particular helps us place that Monday's price rally is likely associated with an overall brusque squeeze, with funding rates continuing to merchandise at fifty-fifty more negative levels despite cost rallying +thirty%."

Glassnode also pointed to Bitcoin'due south on-chain action and highlighted that "in directly dissimilarity to the volatility in spot and derivatives markets, the transaction book and on-concatenation activity remains extremely serenity."

Bitcoin entity-adjusted total transfer book. Source: Glassnode

Overall, how on-concatenation transfer volume responds to the recent price activeness in Bitcoin will provide meliorate insight into where the market is headed, simply as noted by Glassnode, "it remains to be seen whether on-concatenation volumes get-go to option upward in response to recent volatile price-action."

Related : DeFi tokens volume double-digit gains after Bitcoin rallies in a higher place $39,000

Altcoins follow Bitcoin'due south lead

Daily cryptocurrency market performance. Source: Coin360

Bitcoin's recovery above $40,000 also helped spark strong rallies in about altcoins.

Ether (ETH) gained xi% to striking a daily high at $two,433, while Dogecoin (DOGE) posted a seven% proceeds to trade at $0.208.

Other notable gainers include a 64% proceeds for Strike (STRK), a 55% rally in Venus (XVS), a xx% breakout in VeChain Thor (VTHO) and Ankr (ANKR).

The overall cryptocurrency market capitalization now stands at $1.46 trillion, and Bitcoin's potency rate is 47.4%.

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