Bitcoin's price decline continued on Tuesday, failing to sustain its position above $79,000, a level that now appears to be a defining factor in the current market range. The cryptocurrency's price was $76,923 on Tuesday morning, representing a 2.4% decrease over the past 24 hours. This decline occurred after bitcoin reached $79,399 on Monday but was unable to hold onto its gains. Other major cryptocurrencies, including ether, XRP, solana, and BNB, also experienced significant declines, with ether falling 3.7% to $2,290, XRP slipping 3.2% to $1.39, solana dropping 3.9% to $84.10, and BNB declining 1.8% to $625.
The only exceptions among the top 10 tokens were TRON and DOGE. The surge in oil prices, with Brent crude rising 1% to above $109 a barrel, was partly driven by the failure of Iran's interim deal proposal to reopen the Strait of Hormuz. The White House indicated that U.S.
officials were discussing the proposal but emphasized their commitment to maintaining 'red lines' in any potential deal to end the eight-week conflict. The MSCI Asia Pacific Index remained relatively stable, with Japanese stocks receiving support from the Bank of Japan's decision to maintain its policy unchanged. The yen strengthened 0.3% to around 159 per dollar. Market analysts are presenting two distinct interpretations of the bitcoin market.
Mike Novogratz of Galaxy Digital suggested that the return of U.S. retail investors, combined with institutional capital and limited supply, could drive further price increases. Data from Santiment revealed that whales have accumulated over 40,000 BTC in the past two weeks, and the firm noted a significant shift in sentiment from fear to fear of missing out.
In contrast, CryptoQuant's Ki Young-Ju argued that the recent 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 squeezes and the unwinding of squeezes. These two views are not mutually exclusive, as spot demand from retail and institutions can coexist with the rally being 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 the market runs out of shorts to squeeze. 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 announced a $50 million bond issuance to finance new bitcoin purchases, adding to its existing bitcoin treasury. The upcoming Federal Reserve policy decision on Wednesday and the release of megacap tech earnings from major companies may serve as catalysts for the market.
A potential rate cut by the Federal Reserve or a strong earnings beat could push bitcoin past $80,000, but without such a catalyst, the rejection from the $79,000 level may define the upper end of the current range.