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Bitcoin drops below $77K, Ethereum and Solana fall as Hormuz tensions push oil to 3-week high
The cryptocurrency traded at $76,923 on Tuesday morning, down 2.4% over 24 hours after rising to $79,399 on Monday and reversing during the day. Ethereum (ETH) fell 3.7% to $2,290, $XRP ($XRP) dropped 3.2% to $1.39, Solana (SOL) declined 3.9% to $84.10, and $BNB ($BNB) fell 1.8% to $625. The top 10 tokens traded in the red over the past 24 hours, except for TRON (TRX) and Dogecoin (DOGE).
Brent crude rose 1% to above $109 per barrel, extending its rally for a seventh straight day after Iran’s proposal for a temporary deal to reopen the Strait of Hormuz failed to materialize over the weekend. The White House said U.S. officials are discussing Iran’s latest proposal but are maintaining “red lines” regarding any agreement aimed at ending the eight-week war.
The MSCI Asia Pacific Index was little changed, with Japanese stocks supported by the Bank of Japan’s decision to keep policy unchanged in a 6–3 vote. The yen strengthened by 0.3% to around 159 per dollar.
Two narratives are circulating among market analysts.
Mike Novogratz of Galaxy Digital said in a note that U.S. retail investors have returned to the market, and the combination of retail demand, institutional capital, and limited supply is laying the groundwork for further gains. Santiment data shows that whales accumulated over 40,000 BTC in the past two weeks, and the firm noted a sharp shift in sentiment from fear to FOMO in a short period.
CryptoQuant holds an opposing view. Founder Ki Young Ju stated in a post on X that Bitcoin’s move above $79,000 was driven primarily by a short squeeze in derivatives markets rather than sustainable spot demand, and that large-scale short covering makes the market vulnerable to a reversal once the squeeze is exhausted.
Funding rates for perpetual futures on major exchanges have remained negative for 7 days at -0.13%, according to Coinglass. This means short positions are still paying longs to hold positions, a pattern that has historically preceded both squeezes and their unwinding.
These two perspectives are not mutually exclusive. Spot demand from retail and institutional investors may return at the same time that the rally to $79,000 was driven by short covering. The key test is whether the next attempt at that level will bring new spot buying or run out of shorts to squeeze.
Despite this, corporate accumulation continues. According to Bloomberg, Strategy bought $3.9 billion worth of Bitcoin in April, marking its largest monthly accumulation in a year.
Japanese firm Metaplanet announced on Tuesday a $50 million bond issuance to fund 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 U.S.
This week’s catalysts are expected on Wednesday and Thursday.
The Federal Reserve will announce its policy decision on Wednesday, with traders pricing in a higher probability of rate cuts after the Department of Justice closed its investigation into Fed Chair Jerome Powell.
Earnings from megacap tech companies—Alphabet, Microsoft, Amazon, and Meta on Wednesday, and Apple on Thursday—represent roughly a quarter of the S&P 500’s market capitalization.
Either the Fed’s decision or strong earnings could act as a catalyst for Bitcoin to break above $80,000.
