[DigitalToday reporter Yoonseo Lee] Bitcoin failed to regain $79,000, but that has instead increased the chances of a short squeeze as about $1.4 billion in short positions has built up near $80,000.

Cointelegraph, a blockchain outlet, reported on April 28 that many leveraged short positions have formed around that price area over the past 48 hours. If bitcoin recovers $80,000, pressure for forced liquidation of those positions could rise at once.

Bitcoin has held above $76,000 over the past week, widening the gap with its year-to-date low of $60,500. The recent rise came amid higher international oil prices and strength in U.S. stocks, but futures market indicators alone are also signaling the short-term rally could fade. Bitcoin faced resistance at $79,500, and bearish bets increased further in that range.

Some interpretations within the derivatives market also point to excessively one-sided bearish sentiment. The annualized funding rate for bitcoin perpetual futures has been negative for most of the past two weeks. That is usually a sign of stronger bearish conviction. Even so, bitcoin rose from $72,000 on the 9th to $78,000, and many short positions near $76,700 are already in loss territory. This has raised the possibility that traders may have to unwind positions in a rush if it moves above $80,000.

Shifts in expectations for U.S. monetary policy are also cited as a variable. Market data show investors no longer expect the Federal Reserve (Fed) to raise interest rates. Inflation concerns have risen again as Brent crude recovers the $100-a-barrel level, but the Fed is also looking at a cooling labor market and weaker economic growth.

U.S. Treasury futures are currently pricing in a 20 percent chance of an interest rate cut by September. Compared with a month ago, the mood has completely changed.

Diminishing appeal of bond yields is also cited as a reason funds are moving toward bitcoin. As the 3.95 percent yield on 5-year U.S. Treasuries is seen as less attractive than before, the perception is spreading that expected net returns for fixed-income assets could shrink. Rate cuts can raise inflation pressure, which could spur preferences for digital assets such as bitcoin.

Spot market flows remain firm. Strategy bought an additional $255 million worth of bitcoin from April 20 to 26, and U.S.-listed spot bitcoin exchange-traded funds (ETFs) saw net inflows of $824 million. Buying continued even though bitcoin repeatedly failed to settle above $79,000.

The options market also shows strong caution about downside risk. On Deribit, the 30-day delta skew for bitcoin options shows put options trading at an 11 percent higher premium than call options. This means whale investors and market makers see greater downside risk. Viewed the other way, if bitcoin quickly reclaims $80,000, current bearish positions could instead become a trap.

Ultimately, the near-term direction depends on whether spot demand continues to hold up. Bitcoin has yet to break through resistance at $79,000, but if spot accumulation persists and Fed policy tilts less restrictive, pressure on short positions could grow. If that trend continues, liquidity pressure could still lead to a move that breaks above resistance at $80,000.