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Traders push Bitcoin toward the $79,000 resistance level after liquidating $120 million in bearish positions
After gaining 13% in April, Bitcoin surged by more than $2,000 on the first day of May, reaching a daily high of $78,924 before eventually falling back below the $78,300 level.
Key takeaways:
- On May 1, Bitcoin jumped by more than $2,000, testing the $79,000 resistance level after a 13% rise in April.
- The sharp price surge triggered $120 million in short liquidations, while market capitalization reached $1.57 trillion.
- Analysts warn that changes in Federal Reserve policy could trigger volatility in high-valuation assets.
Geopolitical tensions
After finishing April with gains of more than 13%, Bitcoin started the new month on a strong note, rising at one point by more than $2,000 to test resistance at $79,000. According to the daily chart, Bitcoin, which was trading just below $76,500 late Thursday, jumped to $77,340 just minutes before midnight.
Then during early Friday, the leading cryptocurrency fluctuated between $77,000 and $77,500. During a second rally, it reached a daily high of $78,924 around 9 a.m. ET, before quickly giving back part of its gains. At the time of writing (12:30), Bitcoin was trading around $78,300, up 2.6% over the past 24 hours.
Bitcoin’s sharp rise on May 1 increased its market capitalization from $1.52 trillion on Wednesday to nearly $1.57 trillion. Friday’s surge triggered $120 million in short liquidations — more than half of the $217 million in short positions liquidated across the crypto market in 24 hours.
As with U.S. equities, the recovery appears to have been driven by reports that Iran sent a new proposal to Washington through Pakistani intermediaries. However, President Donald Trump reportedly rejected the proposal while speaking to reporters at the White House, noting that although Tehran’s leadership expressed willingness to reach a negotiated settlement, internal divisions make a resolution impossible.
While news of a potential diplomatic breakthrough led to Brent crude prices falling below $110 per barrel, commentators warn that this drop is temporary as long as the Strait of Hormuz remains closed. This suggests that gasoline prices are likely to remain high — a scenario expected to test Trump and the Republican Party in the upcoming midterm elections.
Meanwhile, markets are increasingly recognizing that risks in the Middle East may not disappear anytime soon. Although U.S. officials say that “military actions have ceased,” Trump hinted that the ceasefire could still be reversed. With warnings from Israel about renewed strikes on Iran and unresolved military pressure around the Strait of Hormuz, the current ceasefire looks more like a temporary pause than a long-term solution.
While Bitcoin appears to continue benefiting from residual risk appetite and institutional inflows, a Bitunix analyst warns that if global markets shift from a “soft landing” scenario to trading under stagflation conditions, volatility in high-valuation assets could increase significantly. The analyst added that if markets conclude that the Federal Reserve is losing policy flexibility and directional clarity, liquidity expectations may once again become the dominant source of pressure on risk assets.
