Bitcoin Fails to Hold $80,000: Is the Rally Fueled by New Buying?

Bitcoin fell below $79,000 during Asian trading after rising above $80,000 for the first time since May, as narrowing weekly returns and falling open interest raised questions about whether the rally was driven by new buying or short covering.

According to CoinDesk data, Bitcoin traded just below $79,000 on Thursday morning in Asia, dropping approximately 1%. Among major cryptocurrencies, XRP experienced the sharpest loss, falling nearly 3% while holding above $1.41. Solana, however, rose nearly 4% to climb above $101. Ether also increased by 1%, approaching $2,494.

Weekly gains also narrowed significantly compared to previous levels. Bitcoin’s seven-day return dropped from 23% to 14% within a single day. Ether’s weekly gain fell from 29% to 11%. Despite this, XRP remained ahead with a 28% weekly surge, while Solana decoupled positively in the intraday comparison.

Short position impact debated in Bitcoin rally

Singapore-based QCP Capital stated that the declining amount of open interest points to short covering rather than new buying. Open interest refers to the total number of outstanding futures contracts that have not yet been settled. When investors expecting a decline (bears) buy to close their positions, the price can rise. The company reported that new capital entering spot ETFs tracking the Bitcoin price constitutes the actual demand in the rally.

Macroeconomic expectations became another factor pressuring the upside. Short-term U.S. Treasury bonds saw a sell-off as market participants increased bets that the Fed could raise interest rates. Fed Chair Kevin Warsh will make his first speech as chair at Jackson Hole on Friday. LMAX Group strategist Joel Kruger noted that daily charts have reached overbought territory, highlighting the $82,820 level as the next technical confirmation point. Surpassing this level could potentially open a door that carries the price toward $100,000.