Bitcoin slips to $79K after $81K rejection at 50-week moving average

Bitcoin slipped toward $79,000 on Wednesday after rejection above $81,000, testing whether the 24% rally since Aug. 17 has enough genuine buying behind it.

"The rejection at the 50-week moving average is a meaningful technical signal, but the rally's durability depends on whether spot demand can replace forced short covering as the primary driver," Nicolai Søndergaard, senior research analyst at Nansen, said.

Bitcoin reached an intraday high of $81,265 on Tuesday, its strongest level in three months, before retreating. The peak landed almost directly against the 50-week moving average around $81,085, with the May swing high near $82,800 adding another layer of resistance. U.S. spot Bitcoin ETFs collected about $1.9 billion during the week ending Aug. 21, including roughly $606 million on Aug. 20, according to figures cited by analysts.

The rejection raises the stakes for the coming sessions: sustained trading above $80,000 once leverage settles would provide stronger evidence that buyers can support the move without relying on forced position closures. July Personal Consumption Expenditures inflation data is due Aug. 26, followed by Fed Chair Kevin Warsh's Jackson Hole address on Aug. 28.

Short squeeze fueled the first leg

The rally's initial phase developed as Bitcoin cleared resistance around $65,000 and moved through liquidation clusters above $67,000. More than $3 billion in leveraged shorts were closed across crypto derivatives markets on Aug. 19 and Aug. 20, with short positions accounting for approximately $2.77 billion, or 92 percent of the total, according to liquidation data. Bitcoin shorts made up roughly $1.37 billion of the total, while Ethereum shorts accounted for around $1.01 billion. Binance recorded approximately $518 million in liquidations, Hyperliquid handled about $513 million, and Bybit registered close to $303 million.

Forced buying can increase prices quickly, but each purchase created by a liquidation closes an existing position rather than establishing continuing demand. Søndergaard said a return of rising funding and rapidly expanding open interest during another test of $80,000 would make the advance appear increasingly squeeze-led.

"If $80,000 rejects again while open interest and funding continue to rise, I would interpret the rally as increasingly squeeze-led, leaving room for another correction at some point," Søndergaard said.

Spot demand is the missing piece

Bitget Wallet research analyst Lacie Zhang said ETF purchases, favorable macro conditions and progress on U.S. crypto regulation have given the rally genuine support. Yet she also attributed part of its speed to traders buying Bitcoin to close leveraged bearish positions.

"The latest move looks real, but it is also very fast," Zhang said. "For the rally to sustain above $80K, we need to see fresh spot demand continue after the forced covering fades."

Søndergaard wants to see a positive Coinbase premium and spot-led trading volume alongside continued ETF inflows. He also said funding should remain moderate, while open interest must not rebuild faster than demand in the underlying market.

Zhang said a clean close above $80,000 followed by a successful defense of the level could open a move toward $85,000–$90,000 over the following weeks. An accelerated run toward $95,000–$100,000 is also possible under her scenario if ETF inflows remain strong and liquidity conditions continue improving.

Still, Zhang described the market as stretched after a weekly gain of about 20 percent. Rising funding rates, weaker ETF flows, or a failure to retain $80,000 after crossing it could lead to a reset before another advance, she said.

Macroeconomic data may also affect spot demand. June core PCE inflation stood at 3.3 percent, above the Federal Reserve's 2 percent target, while the advance estimate showed annualized U.S. economic growth slowing to 1.5 percent in the second quarter from 2.1 percent in the first.

This article is for informational purposes only and does not constitute investment advice.