The cryptocurrency market has witnessed Bitcoin being rejected at the $79,000 level three times in eight sessions, establishing this level as a defining range. On Tuesday morning, Bitcoin traded at $76,923, down 2.4% over 24 hours, after reaching $79,399 on Monday and subsequently reversing. Other major cryptocurrencies such as Ether, XRP, Solana, and BNB also experienced declines, with the entire top 10 closing in the red over 24 hours, excluding Tron and Dogecoin.
The surge in Brent crude to above $109 a barrel, driven by the failure of Iran's interim deal proposal to reopen the Strait of Hormuz, has contributed to the decline in cryptocurrency prices. The MSCI Asia Pacific Index remained relatively stable, supported by the Bank of Japan's decision to maintain its policy unchanged. Two distinct readings of the Bitcoin market are emerging among analysts. According to Mike Novogratz of Galaxy Digital, the return of US retail investors to the market, combined with institutional capital and limited supply, creates a foundation for further upside.
In contrast, CryptoQuant's Ki Young-Ju argues that the push above $79,000 was primarily driven by a short squeeze in the derivatives market, leaving the market vulnerable to a reversal. Funding rates on perpetual futures remain negative, indicating that shorts are still paying longs to hold positions, a pattern that precedes both squeezes and their unwinding. The two views are not mutually exclusive, as spot demand from retail and institutions can coexist with short covering driving the rally. Corporate accumulation of Bitcoin continues, with Strategy buying $3.9 billion in April, the largest monthly accumulation in a year.
The upcoming Federal Reserve policy decision and megacap tech earnings may provide the catalyst needed to push Bitcoin through $80,000.