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Bitcoin finally broke out of the tight range it’s been stuck in for weeks, rising to just below the $78,000 mark, a level not reached since early February, as risk-on sentiment floods back into the market.

The jump comes on the heels of Iran and the US announcing the reopening of the Strait of Hormuz on Friday morning, which sent oil prices down and the stock market higher.

The renewed optimism for a deal with Iran and the end of the Middle East conflict also sent crypto stocks jumping, with Strategy, the largest corporate bitcoin holder, up more than 13% late Friday morning.

Wave Digital Assets’ head of international portfolio management, Rajiv Sawhney, told Sherwood News that it’s all about the Strait of Hormuz. “Markets are interpreting it as a win. It’s a knee-jerk reaction given positioning and expectations. As such, while bitcoin was able to tick higher, the $80K level will be the real barometer we need to cross for me to feel confident that this relief rally has legs,” he said, adding that until then, he’s remaining cautiously optimistic that risk assets can close at these levels. 

Nic Puckrin, cofounder of Coin Bureau, told Sherwood that we’re seeing a classic short squeeze as heavy short positions in bitcoin are being liquidated, adding that the next resistance level to watch is $79,000. 

“If we get past that and close the week above this level, $90k becomes a real possibility in the medium term. However, if the rally gets rejected at this level, we could remain stuck in the range between $65k and $75k that held bitcoin hostage for months,” Puckrin added.

Underscoring the cautious comeback, Bloomberg reported that from a derivatives market perspective, “traders remain largely defensive.”

“Funding rates for perpetual futures contracts, a key measure of whether leveraged traders are betting on higher or lower prices, were negative. Hefty premiums are also being paid for put options providing downside protections at $60,000 and $50,000, respectively,” Bloomberg reported.

Bitfinex analysts told Sherwood that the liquidation heat map shows dense shorts leverage stacked between $76,000 and $78,000. 

“Clearing this range opens a substantial air gap in the unspent realized price distribution up to $82,000,” they said, adding that the next level they are watching is $83,000, a “significant wall at the short-term holder realized price.”

OP, the governance token for OP Mainnet, has increased as much as 5% since Tuesday night following news that Ether.fi, a decentralized finance protocol known for providing noncustodial crypto payment cards, completed its migration to the ethereum layer 2 blockchain network. 

Ether.fi’s move resulted in around $220 million in total value locked coming to OP Mainnet, the largest single TVL event in the network’s history, as well as over 70,000 payment cards and more than 300,000 accounts, according to a blog post from Ether.fi. 

Originally on alternative layer 2 network Scroll, Ether.fi made the switch to OP Mainnet due to lower median transaction fees of $0.00001 and sub-250-millisecond finality times. 

“To ship what comes next, we needed infrastructure that could handle real-time payments at consumer volume,” Ether.fi CEO Mike Silagadze told Sherwood News. “OP Mainnet delivered on every dimension. Three days to migrate $220M with no downtime answered the question. Now we get to build.” 

The migration comes about two months after Coinbase-incubated blockchain Base announced moving away from Optimism’s OP Stack. 

Ethereum has rallied 8% in the last 24 hours to trade just under the $2,390 level, liquidating over $151.7 million worth of ethereum short positions in the period. 

The last time ethereum was at its current level was the last day of January, data from CoinGecko shows.

According to Jim Hwang, COO of investment company Firinne Capital, ETH has been acting as a risk asset: declining in times of heightened uncertainties such as the conflict in Iran, inflation expectations, and diminished rate cut hopes.

“Only in the last 24+ hours when these uncertainties have diminished are we seeing prices lift again. We can feel a bit of optimism but to the extent that this cease fire remains tentative, we should probably view the current ETH price gains with caution,” Hwang told Sherwood News. 

A GlassNode senior analyst, who maintains the pseudonymous X account CryptoVizArt, said on X that ethereum has “reclaimed the one-to-three month holder cost basis at around $2,300. So far, this structure is consistent with a bear market relief rally, comparable to the bounces observed in Q3-Q4 2022, rather than a structural trend reversal.” 

Tom Lee, chairman of ethereum treasury firm BitMine Immersion Technologies, said ethereum’s performance since the start of the Iran conflict demonstrates how the cryptocurrency is a “wartime store of value,” per the firm’s press release on Monday, in which it announced acquired 71,524 additional tokens worth $170.5 million. That brings its total stockpile to nearly 4.9 million tokens, or 4% of the total supply of ethereum. 

That said, the founder of venture capital firm Kenetic, Jehan Chu, told Sherwood, “It’s clear that regaining ATH [all-time high] will take real-world revenue-generation, and not just a Tom Lee narrative.”