Bitcoin's price decline continues on Tuesday, following its inability to hold above the $79,000 mark for the third time in eight sessions, thus establishing this level as the defining range. On Tuesday morning, bitcoin was trading at $76,923, marking a 2.4% decrease over the past 24 hours, after reaching $79,399 on Monday and subsequently reversing its gains.
Other major cryptocurrencies, including ether, XRP, solana, and BNB, also experienced significant declines, with losses ranging from 1.8% to 3.9%. The only exceptions among the top 10 tokens were TRON and DOGE, which did not trade in the red.
The rise in Brent crude oil to above $109 per barrel, its seventh consecutive daily increase, was attributed to the failure of Iran's interim proposal to reopen the Strait of Hormuz. The White House indicated that US officials were reviewing the proposal while maintaining their 'red lines' for any potential deal to end the eight-week conflict. The MSCI Asia Pacific Index remained relatively stable, supported by the Bank of Japan's decision to keep its policy unchanged, which led to a 0.3% strengthening of the yen against the dollar.
Market analysts have offered differing interpretations of bitcoin's price movement. Mike Novogratz of Galaxy Digital believes that the return of US retail investors, combined with institutional capital and limited supply, creates a foundation for further price increases. Data from Santiment shows that whales have accumulated over 40,000 BTC in the past two weeks, and the firm has noted a significant shift in sentiment from fear to fear of missing out.
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 rather than sustained spot demand, leaving the market vulnerable to a reversal once the squeeze is exhausted. Funding rates on perpetual futures across major exchanges remain negative, indicating that shorts are still paying longs to hold positions, a pattern that historically precedes both short squeezes and their unwinding.
These two views are not mutually exclusive, as spot demand from retail and institutions can coexist with a rally driven by short covering. The key test will be whether the next attempt to reach the $79,000 level brings fresh spot bids or if it runs out of shorts to squeeze.
Meanwhile, corporate accumulation of bitcoin continues, with Strategy buying $3.9 billion worth of bitcoin in April, the largest monthly accumulation in a year. Japanese company Metaplanet has also announced a $50 million bond issuance to finance new bitcoin purchases, adding to its existing corporate bitcoin treasury. This week's major catalysts include the Federal Reserve's policy decision on Wednesday, which may lead to a rate cut, and the release of earnings reports from major tech companies, including Alphabet, Microsoft, Amazon, Meta, and Apple. Either the Fed's decision or a strong earnings beat could potentially push bitcoin's price above $80,000, otherwise, the rejection from this level may define the upper end of the range rather than preceding a breakout.