Bitcoin's $80K rally is a trap, analyst projects 45% drop

An analyst warns Bitcoin's surge toward $80,000 is a trap, projecting a multi-stage decline to as low as $45,000.

Bitcoin traded near $77,230 on Aug. 24 after peaking at $79,500, yet one analyst warns the rally is a trap that could unwind to $45,000-$48,000.

Bitfinex analysts said the rally still needs real spot demand to take over from the short squeeze, warning that a fall back below about $64,500 would mark the rally as an overshoot on forced buying.

Bitcoin gained more than 20% in a week, with the strongest three-day rally since 2023, after the U.S. Treasury announced increased long-term bond buybacks on Aug. 19. Spot Bitcoin ETFs attracted $1.92 billion in net inflows for the week ended Aug. 22, the strongest weekly intake since October, while more than $4 billion in short positions were liquidated during the surge.

The bearish projection targets $67,000, then $55,000, before a final leg to $45,000-$48,000 — a decline of roughly 40% from current levels. The next test comes at the $80,000 psychological barrier, with the Federal Reserve's FOMC meeting on Sept. 15-16 and the potential CLARITY Act vote in September as key events to watch.

$4B in Short Liquidations Fuel the Rally

Bitcoin's surge began after the Treasury Department announced on Aug. 19 it would increase long-term bond buybacks, easing upward pressure on long-end interest rates and injecting liquidity into risk assets. Treasury Secretary Janet Yellen said on Aug. 20 that "the single-operation cap for Treasury buybacks could exceed the $4 billion we previously announced," accelerating Bitcoin's upward momentum.

The rally gained further momentum from derivatives. When Bitcoin moved sharply higher, traders holding leveraged short positions were forced to close, creating additional buying pressure. Coinglass data shows more than $4 billion in short positions were liquidated over three days, with $98 million in shorts wiped out in the most recent 24-hour period versus $45.3 million in longs.

On-chain data from CryptoQuant shows Bitcoin reclaimed the Short-Term Holder Realized Price near $67,000-$69,000 for the first time since May, while the Long-Term Holder Realized Price held near $49,200, indicating no structural distribution. The price now sits near the True Market Mean of $76,500 and just under the Active Realized Price of $83,800.

Downside Scenario: $67K, $55K, Then $45K

The bearish analyst's projection runs from $77,000 to $67,000, then $55,000, before a final leg to between $45,000 and $48,000. That would represent a decline of roughly 40% from the recent peak near $79,500.

The warning comes as Bitcoin faces significant overhead resistance. In May, Bitcoin briefly surpassed $80,000, reaching a high of $83,000, before a sustained decline that reached a new low in over a year. This created trapped overhead supply in the $74,000-$78,000 range that the market is currently processing as selling pressure.

Crypto analyst Crypto Haris flagged liquidity clusters shaping Bitcoin's short-term direction, noting a pocket near $78,000-$80,000 with a second cluster below around $73,000-$75,000. The daily chart shows RSI above 85, suggesting a stretched setup. He suggested Bitcoin may test the upper liquidity zone before any deeper pullback.

The U.S. dollar's weakness has been a tailwind, with the dollar recording its largest weekly decline against Bitcoin in more than three years. However, economist Peter Schiff warned that Treasury Secretary Scott Bessent's bond buyback plan is "a recipe for massive QE and runaway inflation," which could have unpredictable effects on risk assets. For traders, the $80,000 level is the line in the sand — a clean break above it could open a path toward $90,000, while a rejection could trigger the multi-stage decline the bearish analyst projects.

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