Spring cleaning: Bitcoin tests the regime shift

Analysis by Maximiliaan Michielsen and Stephen Coltman

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April delivered Bitcoin's strongest monthly performance in over a year, rallying roughly 12% to ~$79,500 as the geopolitical backdrop shifted from conflict to cautious de-escalation. The move tested the $78,000 resistance level we recently identified, driven by patient capital flows, an improving geopolitical picture, and a risk-on rally across equities.

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Yet despite momentum, this remains a bear-market rally rather than a confirmed regime change. The current level has held as resistance; the macro backdrop hasn't fully cleared; and the foundation is strengthening, but trend confirmation hasn't arrived yet.

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What happened in April?

The AI theme came storming back, a “ceasefire” was achieved in the Middle East (but the Strait of Hormuz remained closed), and Kevin Warsh got back on track to be confirmed as the new Fed chair.

March's equity sell-off was quickly forgotten. Strong earnings from Intel and TSMC, combined with Anthropic's latest "Mythos" model announcement, triggered a dramatic rebound in technology stocks. The Philadelphia Semiconductor Index rallied 47% in four weeks from its late-March low, and the Nasdaq printed 13 consecutive up days for the first time since 1992, gaining 19% to reach a new record high. The restored risk appetite spilled across asset classes – providing the tailwind that gave Bitcoin room to grind from $69,000 toward $79,500 over the same period.

In the Middle East, the US and Iran announced a two-week ceasefire beginning April 8. Oil fell initially on the news but recovered strongly through the second half of the month as it became clear that no lasting accommodation was forthcoming. At the time of writing, the Strait remains closed, and the oil futures curve sits in historic backwardation, with buyers paying record premiums for immediate delivery, a dynamic that continues to feed through into inflation expectations.

On the policy front, the DOJ dropped its investigation into Chair Powell, clearing the path for Warsh's nomination to advance. Markets, however, are pricing in zero rate cuts for the remainder of 2026, reflecting the view that the incoming chair inherits an environment where energy-driven inflation leaves little room to ease, reinforcing the higher-for-longer backdrop that has defined the macro ceiling throughout 2026.

The US economy entered Q2 in reasonable shape: Q1 growth running around 2% annualised, with softening consumption offset by increased business investment, declining inflation, and strong corporate earnings. But the Iran blockade and developing energy crisis risk derailing that trajectory. Unless the Strait reopens soon, the world faces a major supply shock across vital commodities, a stagflationary combination of higher inflation and lower growth that has historically proved toxic for risk assets. For bitcoin, whether it continues to absorb these headwinds as it has through March and April, or buckles under a renewed oil spike, remains the central question heading into Q2.

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Reasons supporting crypto’s price action

A cautiously de-escalative tone

April's geopolitical tone was different from March's. Rather than further escalation (except for the odd Trump post), the month was defined by the first sustained discussions around resolution, with Polymarket odds for a mid-year peace deal peaking above 80% before settling back – the highest readings since the conflict began. Markets responded to the directionality rather than waiting for the destination, pricing in a world where the situation resolves rather than deteriorates further.

Caution remains warranted, oil continues to push higher even amid ceasefire talks, and the economic damage already done will take a significant time to unwind, regardless of the outcome. But for crypto specifically, the shift in tone mattered: it reduced the probability of a further exogenous shock, gave risk appetite room to rebuild, and allowed the structural demand underneath bitcoin to express itself rather than being suppressed by headline risk.

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Patient capital continues to accumulate bitcoin

The flow picture has become the clearest signal that this correction is being treated as a buying opportunity by the holders that matter most.

US spot bitcoin ETFs absorbed roughly $2.4 billion in net inflows during April, the strongest month in dollar terms since the October crash last year. Total ETF holdings now stand at approximately 1.31 million BTC, trending toward new highs despite prices remaining over 40% below the 2025 peak. 

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Corporate treasuries remain an equally powerful flywheel. Strategy made its third-largest bitcoin purchase on record: 34,164 BTC for ~$2.54 billion, lifting holdings above 815,000 BTC, funded increasingly through preferred instruments like STRC, which has seen over $2.1 billion in offerings since launch. This is a large-scale demand that prior cycles simply didn't have.

Behind both, the institutional product pipeline keeps widening: Goldman Sachs filed for a Bitcoin Premium Income ETF, Morgan Stanley rolled spot crypto to ~16,000 advisors, and BlackRock's yield-focused bitcoin ETF is expected imminently. The effect is a market structure that looks fundamentally different from prior cycles: more stable hands, less reflexive unwinds, and a widening base of institutional buyers with multi-year horizons. Patient capital is building the floor on which confirmation will eventually stand.

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Early risk appetite is returning, but remains limited

The first two dynamics help explain a third: capital is moving up the risk curve, but slowly and selectively. The BTC vs. altcoin market cap ratio climbed to ~2.17x, its highest since mid-2025. Bitcoin and Ethereum (also up ~10% on the month) continue to absorb the lion's share of flows, while the broader altcoin market struggles, reinforcing the “quality over breadth”. 

This is a classic hallmark of early rotation. In prior cycles, capital has moved up the risk curve in stages: bitcoin followed by large-caps – a sequence that we appear to be in the opening phase of. The uncertainty that remains around the geopolitical situation, combined with the institutional flywheel being structurally geared toward bitcoin, means the largest and most liquid asset continues to benefit disproportionately.

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There's also another force keeping capital concentrated: it's been a difficult month for DeFi. Over $620 million was lost to exploits, with Drift Protocol (~$285 million) and Kelp (~$293 million) suffering major breaches. These were protocol-specific vulnerabilities, but the effect is the same: large-scale exploits dampen onchain risk-taking and limit appetite for the tail end of the ecosystem. The industry's response has been encouraging, including DeFi United's $300 million coordinated recovery initiative, but these remain growing pains of a nascent sector. Until the track record improves, larger allocators will continue to favor the blue-chip end of the spectrum.

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What are technicals telling us?

Spot analysis

• Trend structure: Improving but not fully repaired. The 50-day MA (~$71,600) sits below price, and the 100-day MA (~$73,000), which capped price throughout Q1, has been reclaimed. The 200-day MA remains overhead at ~$85,000, but the gap between the 50D and 200D is narrowing, marking the early stage of a reversal. On the longest timeframes, the 200-week MA (~$60,200) and realized price (~$54,100) continue their upward grind; these levels have only been breached during outright capitulation, underscoring that the cycle structure remains intact.
• Momentum: The relative strength index is making higher highs for the first time since before the all-time high, a shift from the lower highs it printed before last year’s eventual market downturn. This signals buying pressure rather than Q1's aimless oscillation, though prior approaches toward this level have coincided with local exhaustion, so a near-term cooldown isn't off the table.
• Key levels: The 100DMA and Liberation Day zone (~$74,400) have flipped from resistance to support. On the upside, $78,000 remains the level that matters, where overhead supply re-emerges as underwater holders approach breakeven. A decisive close above $78,000 opens the path to ~$85,000. If the bid fails, $62,000–$70,000 is the natural accumulation zone.

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Derivatives and broader positioning

Speculative positioning adds a useful layer. Net long positions on CME Bitcoin futures hit a new all-time high on April 7, with speculators accumulating longs through February and March even as the conflict was ongoing, highlighting the conviction behind the $65,000–$70,000 support zone. However, extended positioning at these levels creates its own headwind: as price approaches resistance, profit-taking becomes more likely. We've already seen roughly 20% of that unwind from the early-April peak, suggesting some speculative froth is being cleared, a healthy dynamic if it allows spot-driven demand to take the lead through any eventual breakout.

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Key fundamentals and items to watch

Cycle performance: drawdowns are compressing, but patience may be required

Each successive cycle has seen shallower drawdowns. The current maximum decline of ~50% from the October 2025 high is almost half the ~82% average of prior cycles, a shift driven by patient capital compressing the severity of corrections in ways prior cycles couldn't.

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However, patience may be warranted. We are roughly six or seven months into the current drawdown, while prior cycles have typically taken around a year from peak to trough. Whether patient capital compresses the duration as well as the depth remains an open question, and significant sidelined capital is likely waiting for confirmation before redeploying.

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Miner health at the halving midpoint: under pressure but not breaking

April marked the halfway point between the April 2024 halving and the next expected reduction. The picture is mixed but not alarming. The hash ribbon indicator re-entered capitulation territory in late March, with the 30-day hashrate MA slipping below the 60-day – suggesting renewed stress among less-efficient operators driven by elevated energy costs from the Strait disruption (energy represents over 90% of miner OPEX). Daily revenue (~$33.5 million) sits roughly 24% below its trailing yearly average, but remains well above levels historically associated with forced capitulation.

The balance sheet tells a more constructive story: miner balances are up ~4,400 BTC since Operation Epic Fury began, suggesting surviving operators view current prices as undervalued relative to forward expectations. The primary risk remains exogenous; a further energy spike would compress margins, and growing competition from AI is adding a layer of opportunity cost. This environment will likely accelerate consolidation toward the largest US-based operators, who now account for over 70% of global hashrate. The base case remains gradual stabilization: the weakest hands have already been flushed, and a sustained move higher would re-expand miner margins and likely trigger a new wave of hashrate deployment.

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Stablecoin supply at new all-time highs: capital is staying put

Total stablecoin supply has breached $321 billion, a new all-time high. Growth since the start of the year has been modest at ~$10 billion, but the direction matters more than the pace, particularly when compared to the last prolonged downturn. During the 2022–2023 crypto winter, the stablecoin market cap contracted by nearly 50% as capital actively fled. This time, it's expanding.

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Nearly half of all stablecoins are tied to crypto finance: exchanges, DeFi, and infrastructure. As a result, the stablecoin supply growth largely reflects capital positioning within the crypto ecosystem itself – dry powder sitting on exchanges and in DeFi protocols, ready to deploy. And that's precisely why it matters: unlike 2022, this capital hasn't left. Historically, stablecoin supply holding firm or expanding during corrective phases has been a precursor to Bitcoin's eventual move higher, and with over $320 billion parked and waiting, the fuel for the next leg is already in the system.

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Bull vs. bear case scenarios

Bull case: regime shift confirmation and trend recovery (medium probability)

• A formal ceasefire or peace deal with Iran materializes, removing the primary macro overhang and allowing oil prices to normalize.
• BTC reclaims $78,000 on a weekly close with conviction, opening the path to ~$85,000; sustained acceptance above that level would signal that the corrective phase has been resolved.
• Patient capital continues to absorb supply at current levels, ETF inflows sustain their pace, and the institutional product pipeline further widens the base of structural buyers.

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Bear case: extended consolidation or renewed downside test (low probability)

• Ceasefire negotiations collapse, and the Strait re-escalates, driving oil above $120 and formally reigniting recession risk. The resulting energy supply shock further sours policy expectations and suppresses risk appetite.
• The $78,000 rejection holds – overhead supply from underwater holders and sidelined four-year-cycle capital keep BTC range-bound through Q2.
• A break below $65,000 opens the downside toward the $56,000–$60,000 structural floor, a level only breached during outright capitulation.

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Patient capital, pending catalyst

The rally from the mid-$60,000s to nearly $80,000 was underpinned by the most constructive flow picture since the all-time high: ETF inflows at their strongest and corporate treasuries accumulating at a programmatic cadence. Patient capital is treating the correction as a structural entry point, not a reason to exit.

But the tape hasn't confirmed the breakout yet. The $78,000 zone acted as resistance exactly as expected. And while the macro backdrop is improving directionally, it hasn't cleared: oil remains elevated, rate cuts have been pushed into 2027, and the economic fallout from the conflict in the Middle East will take time to manifest.

The setup, however, is positive. Demand is building structural support across every measurable holder cohort, and the missing ingredient is a catalyst to translate that accumulation into a sustained breakout. May brings a concentrated window: an evolving geopolitical landscape with a meaningful potential for de-escalation, the CLARITY Act's Senate markup, and a Fed leadership transition as Warsh replaces Powell on May 15, setting the tone for rate expectations through the rest of the year. The foundation looks increasingly like a launchpad rather than a ceiling, but whether May delivers the spark remains the question.

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