Bitcoin extended its recovery on Thursday, trading above $77,800 after finding technical support near the 50-day and 100-day Exponential Moving Averages. The price action suggests underlying dip demand, though the asset remains capped below the 200-day EMA near $81,708. Broader upside potential is currently limited by mixed fundamental indicators and macroeconomic headwinds .
Fundamental metrics indicate that US investor demand has not re-engaged at scale during the recent rally . The Coinbase Bitcoin Price Premium has remained negative throughout the May correction, confirming a lack of institutional spot conviction. This weakness in spot participation, combined with ETF outflows, historically points toward renewed price weakness rather than stable consolidation .
How Is Macro Policy Weighing On Bitcoin?
Macro sentiment adds significant pressure to the cryptocurrency market. The Federal Open Market Committee minutes for the April meeting confirmed a hawkish tone in the Federal Reserve outlook . The majority of Fed officials warned that the central bank would likely need to consider raising interest rates if inflation persists above the 2% target .
In high-interest-rate environments, liquidity typically declines as markets shift toward safer, yield-bearing assets . This macroeconomic backdrop weighs heavily on risk assets like Bitcoin, limiting the effectiveness of technical recoveries . The combination of tight monetary policy expectations and weak spot demand creates a challenging environment for sustained bullish momentum.
What Do Onchain Metrics Reveal About Investor Conviction?
Onchain data highlights structural weakness in Bitcoin's current price action. The 30-day Realized Profit/Loss Ratio has spiked from a February low of 0.4 to 1.8 during the recent rally . This spike reflects demand insufficient to absorb a wave of profit-taking, as sellers used the price recovery as an exit opportunity.
Glassnode notes that a sustained move above a ratio of 2, held over multiple weeks, would constitute a more meaningful signal of genuine buy-side conviction . Additionally, the 30-day cost basis at $78,200 has flipped from support to overhead resistance . The accumulation cohort from February to April, with a cost basis near $71,400, now represents the most probable near-term support floor .
Options markets reflect similar caution among traders. Bitcoin's 25-delta skew moved more bearish over the past week, with the front end shifting from 2.7% to 6.2% . Put buying represented 55.5% of the taker premium over the past seven days and more than 90% of the premium over the last 24 hours . This indicates significant hedging activity against downside risk near current price levels.
Could A Short Squeeze Drive Prices Toward $80,000?
A liquidity imbalance is building near $80,000, with more than $4 billion in short positions vulnerable to liquidation. The setup strengthened after Bitcoin defended support near $76,100 for two days and formed bullish signals on lower time frames . On the one-hour chart, Bitcoin formed a bullish divergence between the price and the relative strength index .
The price action is shaping an inverse head-and-shoulders setup beneath a descending trendline, a structure that often signals weakening bearish pressure before a breakout . A move above $78,000 could expose the fair-value gap between $79,500 and $80,300 . This low-liquidity price zone was created during a sharp prior selloff and could be revisited by the BTC price before its next major move.
By comparison, a decline toward $75,000 would expose roughly $3 billion in long liquidations . This indicates that short sellers face greater pressure than bullish positions if Bitcoin continues to climb . However, spot market participation remained weak during the recovery toward $78,000, with the aggregated spot cumulative volume delta standing at -$483 million . Futures activity has largely overshadowed spot participation, with open interest near 116,800 BTC .
Technically, the Relative Strength Index at 48 is slightly soft, while the Moving Average Convergence Divergence remains below zero . This suggests that bullish momentum is subdued despite ongoing consolidation above trend support . Initial resistance aligns with the 50% Fibonacci retracement at $78,962, ahead of the 200-day EMA at $81,708 . Further barriers exist at the 61.8% Fibonacci retracement near $83,437.
Above spot, $85,900 represents a major resistance zone where investors who accumulated between November and February reach breakeven . They may look to distribute their positions at that level . A sustained break below the operative floor between $76,300 and $76,500 would signal a drop in short-term investor conviction .