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Bitcoin Hits a Two-Week Low Below $78,000 — Analysts Point to a Bear Trap
Bitcoin fell below $78,000 for the first time since early May, immediately sparking debate: is this a bear trap or the beginning of a deeper decline?
According to Bitstamp data, Bitcoin dropped to a low of $77,614 on 16 May. Several factors added pressure to the market simultaneously, including concerns over the US bond market, geopolitical tensions, and the threat of another wave of inflation.
BTC/USD 1-Day Chart and 200EMA. Source: Bitstamp
Multiple Risks Converge at One Point
Iran reportedly intends to introduce paid transit through the Strait of Hormuz — a key artery for global oil supplies — while simultaneously closing it to US shipping. The Kobeissi Letter reported that the strait would remain closed to operators involved in the so-called “Freedom Project”. Against this backdrop, WTI crude oil ended the week above $100 per barrel.
Analysts at Mosaic Asset Company described the current macroeconomic environment as increasingly resembling the inflation surge seen in the first half of 2022. In its weekly report, the company noted that supply chain disruptions caused by the trade war, the impact of military conflicts on energy markets, and stimulus driven by a high budget deficit are all occurring simultaneously. For risk assets — a category that traditionally includes cryptocurrencies — this combination creates obvious downward pressure.
Bear Trap or a Move Towards $75,000
Despite the decline, trader Cryptic Trades highlighted unusual market behaviour. Open interest has continued to rise in recent days despite falling prices, while funding rates have turned negative. This suggests that bears are aggressively increasing short positions — as though a confirmed breakdown has already occurred, even though the broader market structure remains intact.
This is typically how bear traps are formed: when mass short positioning creates the conditions for a sharp upward reversal.
Bitcoin Price, Open Interest, and Funding Chart. Analysis: Cryptic Trades
However, not everyone remains optimistic. Analyst Eric Coleman identified the next local downside target around $75,000, citing a breakout below an ascending triangle followed by a retest of that level. Another market observer, Daan Crypto Trades, pointed to the $71,000 zone as the nearest major liquidity level below current prices.
AI Perspective
From a machine-driven data analysis standpoint, the current situation reveals an intriguing paradox: the geopolitical tensions surrounding the Strait of Hormuz are simultaneously pressuring Bitcoin as a risk asset while potentially strengthening its narrative as “neutral money”.
This is no longer just theoretical — Iran is reportedly discussing the possibility of accepting Bitcoin payments for transit through the very strait currently weighing on market prices. It is a historically unprecedented situation in which the same asset is both suffering from the crisis and being proposed as a tool to help resolve it.
See also: "Spot XRP ETF Balances Are Changing: Here’s the Latest Situation!"
