Is it déjàvu, October 2020? Bitcoin’s pullback to $38K has traders divided about the next move.

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Following yesterday’s rally above $40,000, Bitcoin has consolidated below $38,000, while altcoins have given back the majority of their gains.

Following Bitcoin’s (BTC) brief spike above $40,000 the day before, the wider cryptocurrency market entered a period of consolidation on July 27. This helped ignite a rally across the market and brought a renewed sense of optimism to the market.

Data from TradingView shows that a mid-day attempt by bulls to lift the price of BTC back above the $40,000 level was rejected resulting in a price pullback to $37,500.

BTC/USDT 4-hour chart. Source: TradingView

While Tuesday’s price drop may indicate that Monday’s rally was merely a short squeeze, others point to the rising Grayscale Bitcoin Trust (GBTC) premium, which is now at its highest level in months at -5.88 percent, implying that institutions are once again betting on more BTC price upside.

Bitcoin bulls are fighting to reestablish the uptrend.

Rumors that Amazon would begin accepting cryptocurrency payments in 2021 fueled the market-wide rally seen on Monday, though the company later denied the rumours.

However, as pointed out by pseudonymous independent market analyst Rekt Capital, Bitcoin’s price chart shows a fractal pattern that is similar to the price-performance in October 2020, just before BTC price began its run to a new all-time high.

If a similar pattern emerges in the current market, Bitcoin’s price will continue to rise as a result of the Amazon rumours.

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However, not all of the available data points to a continuation of the upward trend, as noted by Jarvis Labs analyst and co-founder Ben Lilly, who has been monitoring on-chain data to gain a deeper understanding of the most recent pump, particularly with Ethereum’s London hard fork scheduled for Aug. 4.

Lilly said,

“Onchain activity and demand hasn’t showed up. Pair this up with Amazon news as fake and shorts getting rekt, I wouldn’t be surprised to see low $30ks be4 1559.”

An example of bearish bias, however, was provided by the pseudonymous Twitter user Bear Wolf, who saw Monday’s developments as nothing more than a short squeeze amid a wider bear market.

“19K is still my target for the end of the bear market,” he wrote. “Dead Cat Bounce to 46K (Short Squeeze). TA invalidates if we pump to 50K and find support >>ABOVE

Altcoins give back gains

A significant portion of the gains seen in the altcoin market on Monday were given back on Tuesday as the euphoria from the Amazon rumours faded.

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Daily cryptocurrency market performance. Source: Coin360

Dogecoin (DOGE) and Solana (SOL) were the two hardest-hit tokens in the top 20, losing 10% and 10.8%, respectively, while Monday’s top performers Strike (STRK) and Venus (XVS) both lost 16%.

The best performances of the day came from Axie Infinity (AXS) and MyNeighborAlice (ALICE), which both gained 30%, while Civic (CVC), a blockchain-based identity management solution, saw its price rise by 20%.

The total cryptocurrency market cap is now $1.488 trillion, with Bitcoin dominating at 47.8 percent.


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