Bitcoin passes $81,000 as optimism builds
One expert said “these levels could represent the critical ‘demarcation line’ between bull and bear market.”
Bitcoin not only broke the $80,000 level but hit $81,600 Tuesday morning, its highest point since late January. Optimism for progress on the CLARITY Act, as well as the Iran ceasefire holding despite tensions, are among the factors driving this rally.
Rajiv Sawhney, head of international portfolio management at Wave Digital Assets, told Sherwood News that bitcoin’s move was “very simple.”
“De-escalation on the US-Iran situation in the short term. Until we get more clarity on whether the attack on US warships will escalate, I think in general risk assets will trade heavily,” Sawhney said.
Another positive indicator for bitcoin is the declining ratio of short-term holder to long-term holder supply, indicating a more stable market shaping up.
“This value is near the low band of 15.1%, highlighting a strong presence of long-term holders. This suggests a market structure characterized by higher conviction and lower liquidity, potentially leading to more stable market conditions with reduced speculative activity,” Glassnode analysts said in a report.
Bitcoin ETFs, another support for bitcoin’s price, remain strong, with $532.21 million in inflows on Monday, making their total for May $1.16 billion, according to SoSoValue.
Sentiment is cautiously optimistic. Max Kahn, CEO of Digital Wealth Partners, told Sherwood that breaking through $80,000 is one thing, but holding it will depend on whether the current drivers remain intact — namely, ETF inflows and a supportive macro backdrop.
“Bitcoin has become increasingly sensitive to liquidity and interest rate expectations, so maintaining strength at these levels will likely require continued institutional demand and stable inflation and policy signals. Short-term volatility around key levels should be expected,” Kahn said.
Bitfinex analysts echoed the sentiment, saying that the macro backdrop has become slightly less hostile, removing some pressure from risk assets.
“But with no clear liquidity tailwind and persistent geopolitical risk in the Middle East, bitcoin still requires strong spot-led demand to move decisively higher,” they said.
Finally, some experts said that the recent rebound is “somewhat stretched in the short term,” even though “cryptoasset and cross-asset sentiment have become quite bullish,” according to André Dragosch, Bitwise’s head of research in Europe.
Dragosch told Sherwood the implication is that we probably won’t cross the critical cost bases around $80,000 to $81,000 sustainably, as positioning and sentiment are already somewhat stretched.
“High sentiment readings tend to be a contrarian indicator as they tend to signal imminent buyer fatigue. These levels are somewhat critical because of a confluence of different cost bases, such as the True Market Mean, the short-term holder cost basis, and the average US spot bitcoin ETF cost basis,” Dragosch said.
Above/below these levels, Dragosch said the average bitcoin investor has unrealized profits/losses, and as such, these levels could represent the critical “demarcation line” between a bull or bear market.
“Personally, I do believe that bitcoin will ultimately reclaim these levels, but it will probably happen alongside a stronger demand impulse from institutions,” he said.
