Bitcoin's price has fallen to $76,923 on Tuesday, following a failed attempt to hold above $79,000 for the third time in eight sessions. This level is now seen as a defining feature of the current range.
The cryptocurrency had climbed to $79,399 on Monday before reversing its gains throughout the day. 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 were TRON and DOGE, which bucked the trend.
The rise in Brent crude to over $109 a barrel, its seventh consecutive daily gain, was driven by the failure of Iran's interim deal 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 deal to end the eight-week conflict. The MSCI Asia Pacific Index remained relatively unchanged, with Japanese stocks supported by the Bank of Japan's decision to keep its policy unchanged. The yen strengthened by 0.3% to around 159 per dollar.
Market analysts are currently debating two possible interpretations of the Bitcoin market. According to Mike Novogratz of Galaxy Digital, the return of US retail investors, combined with institutional capital and limited supply, creates a solid foundation for further upside potential. 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, analysis firm CryptoQuant takes a more bearish view, arguing that Bitcoin's push above $79,000 was primarily driven by a short squeeze in the derivatives market rather than sustained spot demand.
The firm's founder, Ki Young-Ju, believes that large-scale short covering has left the market vulnerable to a reversal once the squeeze exhausts. Funding rates on perpetual futures across major exchanges remain negative, indicating that shorts are still paying longs to hold positions. This pattern has historically preceded both short squeezes and their subsequent unwinding. The 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 front-loaded by short covering.
The key test will be whether the next attempt at this level brings fresh spot bids or runs out of shorts to squeeze. Corporate accumulation of Bitcoin continues to grow, with Strategy buying $3.9 billion worth of the cryptocurrency 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.
The week's major catalysts are set to arrive on Wednesday and Thursday, with the Federal Reserve announcing its policy decision on Wednesday. Traders are pricing in a higher likelihood of a rate cut after the Justice Department closed its probe into Fed Chair Jerome Powell.
The earnings reports from major tech companies, including Alphabet, Microsoft, Amazon, Meta, and Apple, will also be closely watched, as they represent roughly a quarter of the S&P 500's market capitalization. Either the Fed's decision or a strong earnings beat could be the catalyst to push Bitcoin past $80,000. Without one, the rejection from this level may start to define the upper end of the range rather than precede a breakout.