Bitcoin jumps to highest level since February, boosted by optimism over reopening of Strait of Hormuz

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.”