It looks like Bitcoin is preparing to launch a relief rally

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  • Bitcoin has regained 1,500 points in market capitalization in the last 16 hours.
  • The network is expanding, indicating another bullish potential.
  • Bitcoin must hold above $38,500 to have a chance to rise to $41,570.

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Bitcoin rebounded from the critical support level after entering the monthly trading session in weak form. Chain-level and technical metrics suggest further gains may be on the horizon.

Bitcoin prepares for a bounce

Bitcoin appears to be gaining momentum for a comfortable rally. If it succeeds, it could eventually surpass the psychological level of $40,000.

The top cryptocurrency has fully recovered from the 4% drop it saw at the start of the month. Bitcoin has regained more than 1,500 points in market capitalization in the past 16 hours, briefly surpassing the $39,000 mark. As the network growth turns positive, there may be more gains ahead.

The number of new addresses created on the Bitcoin network has been trending upwards over the past two weeks. While bitcoin fell from a high of $43,000 on April 21 to a low of $37,350 on May 1, the number of new addresses created on the network rose from a seven-day average of 401,300 to 421,800.

This on-chain activity indicates a steady increase in user adoption over time, which could positively impact the bitcoin price.

Source: Glassnode

Moreover, during the network expansion, Bitcoin appears to have broken out of the falling wedge that has developed on the four-hour chart. The rising Y axis of the pattern indicates that higher upward pressure could push Bitcoin more than 8% towards the $41,570 target.

Bitcoin price chart
Source: TradingView

However, Bitcoin must continue to trade above $38,500 to validate the optimistic forecast.

If it fails to hold above the critical support area, traders can be encouraged to exit their positions in anticipation of a dip. A possible increase in selling pressure on the break of the $38,500 support level could send Bitcoin to retest the recent decline at $37,350 or result in a lower decline at $35,950.

A few months into the origin of cryptocurrency have passed with a few months in the midst of macroeconomic uncertainty and burnout in the cryptocurrency market. Despite the optimistic outlook, it is still trading over 40% from the $69,000 peak recorded in November 2021. At current prices, the market capitalization of Bitcoin is around $741 billion.

Disclosure: At the time of writing, the author of this article is owned by BTC and ETH.

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