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dead-cat bounce?

Bitcoin faces $80,000 resistance level

“Out of the woods short-term? No. Bitcoin crossing $78K is a bounce, not a bottom,” according to Zaid Khan.

Yaël Bizouati-Kennedy

Bitcoin is struggling to hold the $78,000 level and faces resistance at the $80,000 level amid geopolitical tensions putting pressure on risk assets.

While there was quick optimism after bitcoin hit its highest level since early February, several analysts said the asset still faces headwinds.

“Out of the woods short-term? No. Bitcoin crossing $78K is a bounce, not a bottom. The tape moved, the structure didn’t. Until it reclaims the downtrend line drawn from the $126K cycle high on a weekly close, we treat this as a dead cat bounce, a mechanical rebound at a level the market was always going to defend once, not evidence the correction is over,” Zaid Khan, CEO of Manhattan Crypto Capital, told Sherwood News, adding that the most expensive mistake investors make in crypto is confusing a mechanical bid for a structural one.

Short-term (in the next 4 to 12 weeks), Khan said he’s skeptical of the bounce, and the reasons they are “not chasing” include that $78,000 is a reflex level, not a conviction level.

“Systematic desks, CTAs [commodity trading advisers], and short covers are mechanically programmed to bid in this zone. A bounce here is plumbing, not thesis,” he said.

In addition, Khan said that bitcoin is still trading below the downtrend line from $126,000, weekly momentum is still cooling, and there’s no accumulation signature in the volume.

“Price lifted through air — that’s not the same as buyers showing up,” he said.

In terms of potential risks, Khan cited a sustained macro risk-off regime, which would extend the correction beyond the first bounce. ETF flow reversals and liquidity thinness, as “weekend, and low-volume sessions distort both the bounces and the breakdowns,” could also put pressure on the asset, he said.

Finally, the consensus trap. “When everyone exhales at the same time, that’s usually the setup for the next leg lower, not the bottom,” Khan said.

Khan is watching for a weekly close above the downtrend line from $126,000, with an expanding range, which could open the path to $202,748.

Manhattan Crypto Capital chart
(Zaid Khan/Manhattan Crypto Capital)

“$63,560 — our first accumulation band. Highest-probability test zone. $48,642 — structural support. A weekly close below here and we flip defensive, rotating capital into private credit, gold, or cash,” Khan said.

Khan noted that they remain structurally bullish over the 12- to 24-month term, as a ~38% drawdown from the $126,000 peak is a normal feature of bitcoin bull cycles, not a warning.

“Our composite Quant Regime Score is 63/100, with Risk-On at 58 versus Risk-Off at 42 — constructive, not euphoric. The cycle is paused, not over,” he said.

Other analysts agreed that headwinds remain for bitcoin, including what Glassnode analysts call the “next wall”: the short-term holder cost basis. This stands just over $80,000 and “represents the average acquisition price of investors who purchased within the last 155 days, a cohort historically proven to be the most price-sensitive in the market,” they said.

As price nears their break-even level, “the behavioral incentive to exit positions intensifies, making this zone a natural source of distribution pressure,” they said.

glassnode btc chart april 23
(Glassnode)

“This pattern suggests that the $78k–$80.1k zone represents significant near-term resistance, while $70k is increasingly assuming the role of a developing mid-term support floor as the market works through this overhead supply,” they said.

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Hyperliquid reclaims all-time high

HYPE, the native token powering perpetuals exchange Hyperliquid and its underlying blockchain, rebounded to reclaim its all-time high previously set at the start of the month.

Treasury firms Hyperliquid Strategies and Hyperion DeFi have also rallied as the token increased double digits in the last 24 hours to trade as high as $76.70, rising past its record price set nearly two weeks ago, according to CoinGecko. In the interim between all-time highs, HYPE pulled back to around $53.

The token has several tailwinds, the first coming from ETF flows. Since their inception in May, HYPE ETFs have yet to record negative weekly outflows, posting a cumulative total net inflow of $171.8 million, per SoSoValue.

The second comes from Hyperliquid spending basically everything it earns in fees to buy HYPE, a mechanism embedded into the protocol’s codebase.

The venue’s buyback funding mechanism is set to add a new source of yield. Validators of the network activated “AQAv2,” which means stablecoin deployers will share about 90% of reserve yield revenue on their supply within the protocol.

Around $6.1 billion of Circle’s USDC resides in Hyperliquid, per DefiLlama. Accrual begins on August 26 and the first payment is made on October 3, the network announced in its Discord channel last week.

A substantial amount of capital is riding on different positions of HYPE. In total, a move down to under $53 would result in the liquidation nearly 1.8 million HYPE worth of leveraged long positions on the on-chain perps venue, or $131.7 million, data from CoinGlass shows. For the upside, a climb above $100 results in the liquidation of more than 3 million worth of leveraged HYPE short positions, or $221.5 million.

HYPE’s rebound to all-time high comes after Michael Selig, chair of the Commodity Futures Trading Commission, defended his agency’s decision to approve regulated perpetuals, or futures contracts without expiration dates, CNBC reported on Monday.

Last month, the CFTC approved bitcoin perpetual futures trading in the US through regulated prediction markets firm Kalshi and an affiliate of centralized exchange Coinbase.

“Perps are highly likely to become lightly regulated and thus approved in the US,” said David Pakman, head of venture investments at CoinFund.

“We expect to see perps for many different types of assets, from commodities to equities,” Pakman told Sherwood News.

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Crypto market snaps back as sentiment lifts, with altcoins from ethereum to XRP soaring

The market capitalization of the crypto industry has jumped around $83.2 billion in the last 24 hours, with privacy-focused token Zcash and worldcoin, the native cryptocurrency of the network backed by OpenAI CEO Sam Altman, leading market gains, jumping over 22%.

But the last 24 hours have been good across the board:

Investors have been eager to see some positive signs around the Iranian conflict ending, coupled with hopeful outlooks around the CLARITY act, both breathing some life into assets, Kairos Research cofounder Ian Unsworth told Sherwood News.

Simon Shockey, a crypto strategist at crypto wallet infrastructure firm Privy, said the upswing stems from several things converging. He pointed to how alt markets broadly were very oversold following the bug found in Zcash that shook confidence.

Friday, Zcash founder Zooko Wilcox said Anthropic didn’t find any more serious bugs with the Zcash protocol after Shielded Labs requested the AI firm run a security audit of the network with Mythos.

Shockey added that the pool of willing sellers has dwindled. Even if structurally, AI is a much more compelling and asymmetric bet in the eyes of allocators, many of these crypto assets have simply run out of marginal sellers despite some shorter-term narrative-driven pumps. The only people left to sell at this point are the teams themselves and VCs.

Net-net: oversold conditions plus exhausted seller bases plus a macro backdrop thats stabilized equals a snapback, especially in names that have real usage or community conviction behind them,” Shockey told Sherwood.

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