The price of bitcoin has dropped on Tuesday after failing to sustain its position above $79,000 for the third time in eight sessions, establishing this level as a key benchmark. On Tuesday morning, the cryptocurrency was trading at $76,923, down 2.4% from the previous day, after reaching $79,399 on Monday and then reversing its gains. The value of ether decreased by 3.7% to $2,290, while XRP and solana experienced declines of 3.2% and 3.9%, respectively. BNB also fell by 1.8%.
The only top 10 tokens that did not trade in the red over the past 24 hours were TRON and DOGE. Meanwhile, Brent crude oil rose by 1% to over $109 per barrel, marking its seventh consecutive day of gains, following the failure of Iran's proposal to reopen the Strait of Hormuz. The White House has stated that US officials are discussing the latest Iranian proposal while maintaining their 'red lines' on any potential deal to end the eight-week conflict.
The MSCI Asia Pacific Index remained relatively unchanged, with Japanese stocks receiving support from the Bank of Japan's decision to keep its policy unchanged. The yen strengthened by 0.3% to approximately 159 per dollar.
Market analysts are considering two possible interpretations of the bitcoin market. 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 solid foundation for further growth. Data from Santiment indicates 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 founder Ki Young-Ju believes that bitcoin's surge 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 on a 7-day basis, indicating that shorts are still paying longs to hold positions, a pattern that often precedes both squeezes and the unwinding of squeezes. However, these two views are not mutually exclusive, as spot demand from retail and institutions can return at the same time as the rally toward $79,000 was driven by short covering.
The key test will be whether the next attempt to reach this level brings fresh spot bids or runs out of shorts to squeeze. Corporate accumulation of bitcoin continues, with Strategy buying $3.9 billion worth of bitcoin in April, its largest monthly accumulation in a year. Japanese company Metaplanet has announced a $50 million bond issuance to finance new bitcoin purchases, the latest in a series of yen-denominated debt deals used to build one of the largest corporate bitcoin treasuries outside the US. This week's catalysts are expected to arrive on Wednesday and Thursday, with the Federal Reserve announcing its policy decision and megacap tech earnings from major companies, which could potentially push bitcoin past $80,000.