Bitcoin ‘compression’ outcome may send BTC to $80K: Analyst

Bitcoin charts point to a possible rally to $80,000, but spot volumes need to increase in order for the rally to hold.

Bitcoin (BTC) is testing the $71,500 pivot, a key level across multiple timeframes and analysts noted that price action is tilted toward a possible rally to $80,000.

As traders remain split between futures-driven speculation and weak spot demand, Bitcoin has tested the $71,500 inflection point four times in the past seven days. A positive is that the price has held above the 50-period exponential moving average (EMA) on the four-hour chart, but the 50-day EMA on the daily chart continues to act as a level of resistance.

Crypto trader Skew described the position as a “compression zone,” where the tightening price range and trading may lead to a strong directional move.

A bullish inverse head and shoulders pattern is also forming on the four-hour chart, with $71,500 acting as the neckline. 

A confirmed breakout places the immediate technical target near monthly highs at $76,000, a 7.35% move from current levels. Market analyst Mikybull extends this projection toward $80,000.

Another onchain signal points to the possibility of a 10% to 14% Bitcoin rally. The seven-day standard deviation of short-term holder realized profit and loss flows to Binance dropped to 255 on March 24, returning to a level seen before prior rallies.

A similar reading near 277 on Feb. 27 was followed by a 14% rise, while a level around 289 in late December preceded a near 10% gain. The current compression shows a decline in sell-side volatility, with the short-term holder distribution becoming more controlled.

Related: Bitcoin holders shift from panic to cash-buffer discipline as volatility deepens

The recent price strength followed market optimism tied to a potential ceasefire in the US and Israel-Iran war, but on Wednesday, Iran rejected the US peace proposal and outlined its own conditions for ending the conflict, according to the Kobeissi Letter.

BTC held steady through the update, while sensitivity to the US dollar strength and energy prices continues to guide short-term reactions.

The derivatives positioning shows increased activity. BTC open interest (in terms of USD) has risen by $500 million to $16.5 billion over the past 24 hours, with funding rates turning positive at 0.03% since Monday. The latest rally toward $70,000 was driven largely by futures markets. 

The spot participation lags, with a weak aggregate cumulative volume delta of -$87 million and a negative Coinbase premium signaling softening US-based demand. Thus, the order flow data points to a distributive nature between buyers and sellers across the spot and futures markets. 

Skew explained that for Bitcoin to sustain a breakout above $71,500, the rally needs to be backed by stronger underlying demand, specifically, strong buyer support, steady accumulation, and continued absorption of selling pressure from short traders. 

A $60 million bid was filled during the New York session, highlighting renewed demand, but a clear follow-through is needed for the price to retain a bullish structure above $71,500.

Related: Bitcoin rebounds during Iran war, but safe haven role unproven

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.

Source: CoinTelegraph