Bitcoin rockets past $80K but one technical warning could spoil the breakout

Bitcoin has climbed more than 25% over the past seven days to reclaim $80,000 for the first time since mid-May, extending its strongest weekly rally in more than three years.

According to CoinGecko data, Bitcoin was trading near $80,300 on Aug. 25 after starting the seven-day period around $64,000, with most of the rally taking place between Aug. 19 and Aug. 21 before another push above $80,000 on Tuesday.

BTC has gained around 4% over the past 24 hours and briefly moved above $81,000 before pulling back. 

The latest leg followed several days of trading largely between $76,500 and $79,000 after the initial surge from the mid-$60,000 range.

The rally started after the US Treasury Department announced on Aug. 19 that it would increase the maximum size of liquidity support buybacks for longer-dated nominal Treasury securities by at least twofold.

Under the change, which takes effect on Sept. 9, the maximum size of certain buyback operations covering the 10-to-20-year and 20-to-30-year sectors will increase from $2 billion to at least $4 billion per operation. 

The higher limits will remain in place through Nov. 4, when the Treasury is due to hold its next quarterly refunding.

Following the announcement, long-term Treasury yields initially fell as investors assessed the potential liquidity impact of larger government bond purchases. 

Concerns over US borrowing costs and fiscal deficits also weakened the dollar and increased investor interest in alternative assets, including Bitcoin and gold.

Institutional demand through US spot Bitcoin exchange-traded funds added another source of buying pressure as BTC moved higher.

Data from SoSoValue showed that spot Bitcoin ETFs recorded $1.92 billion in net inflows between Aug. 17 and Aug. 21, their strongest weekly intake in around 10 months. 

The funds recorded inflows during all five trading sessions, including $606.3 million on Aug. 20 alone.

BlackRock's IBIT accounted for $1.33 billion of the weekly total, while combined Bitcoin ETF assets rose to $96.07 billion as both inflows and higher BTC prices lifted assets under management.

Leveraged traders have also added momentum to the rally as Bitcoin pushed through resistance. 

More than $280 million in Bitcoin short positions were liquidated over 24 hours as BTC approached $80,000, forcing traders betting on lower prices to close positions while the spot market was already moving higher.

BTC price action

Bitcoin's daily technical structure remains bullish after the latest rally, although several indicators show that the move has become stretched following the rapid rise from the mid-$60,000 range.

On the daily timeframe, BTC was trading around $80,455 and remained well above its 20-day, 50-day, 100-day, and 200-day exponential moving averages at approximately $70,505, $67,332, $67,655, and $71,854.

BTC/USD 1-day price chart. Source: TradingView.

The move above the 200-day EMA is particularly important because BTC had traded below the long-term average since its June sell-off. 

Price has now created a gap of around 12% above the 200-day EMA, while the shorter 20-day EMA has turned sharply higher following the breakout.

Trading volume also expanded during the move from the mid-$60,000s, with some of the largest daily volumes on the chart accompanying the green breakout candles. 

Chaikin Money Flow has climbed to 0.31, placing it firmly above zero and showing that buying pressure has accompanied the price increase.

BTC/USD 1-day price chart. Source: TradingView.

Momentum is considerably more stretched. The 14-day Relative Strength Index has reached 83.63, well above the conventional overbought threshold of 70, with its RSI moving average near 63.96. 

The reading leaves BTC vulnerable to a short-term pullback or consolidation even while the underlying daily trend remains bullish.

Volatility has risen alongside the rally, with the 14-day Average True Range climbing to around $2,260 from close to $1,200 earlier in August. 

This means daily price swings have almost doubled over that period, raising the possibility of larger moves in either direction around the $80,000 breakout.

Immediate resistance sits around $81,000 to $82,500, an area that includes the recent intraday high near $81,255 and the May swing highs visible on the daily price structure. 

A daily close above $82,500 would leave $83,000 as the next immediate level, where additional short liquidations could add momentum if buyers maintain control.

The 24-hour liquidation heatmap supports liquidity above the current market price, with clusters concentrated around $81,500 to $82,000 and additional positions extending toward $83,000.

See below:

Bitcoin 24-hour liquidation heatmap. Source: Coinglass.

Below the market, $80,000 is the first level to watch after the breakout. 

A move back below it could bring $78,000 to $78,500 into play, while the largest visible liquidation concentration on the 24-hour heatmap sits around $77,500 to $77,700.

A deeper correction towards that liquidity pocket would still leave BTC well above its major daily moving averages. 

The 200-day EMA near $71,854 and 20-day EMA around $70,505 form the next major technical area below current prices if selling extends beyond the upper-$70,000 range.