Bitcoin pulled back after another attempt to break above $80,000 fell short, as higher oil prices and persistent bearish positioning in derivatives markets dampened sentiment. Even so, the broader setup suggests the rally could accelerate if short sellers are forced to cover, while weakness across altcoins and capital flows continues to build.

The crypto market traded lower Thursday, with bitcoin (BTC) down roughly 0.7% since midnight UTC to around $77,600. The decline followed a push to its highest level since January a day earlier, where selling pressure emerged just below the $80,000 resistance zone.

Rising geopolitical tensions added to the risk-off tone. Oil prices climbed about 1.5% to $103 per barrel after reports that the U.S. seized three Iranian tankers in Asian waters. U.S. stock futures also slipped, with S&P 500 and Nasdaq 100 futures both falling around 0.5%.

Ether (ETH) lagged, dropping 2.5% to near $2,320 after failing to sustain momentum close to $2,500 over the weekend.

Despite the pullback, bitcoin’s broader trend remains constructive. The asset appears to have broken out of a two-month consolidation range between $63,000 and $75,000, where it had traded since early February.

In derivatives markets, bitcoin futures open interest has eased to around 775,000 BTC from near-record highs earlier in the week, though it remains elevated. Meanwhile, negative perpetual funding rates signal that traders continue to lean bearish.

This unusual positioning has led some analysts to describe the move as a “most hated” rally—one that could extend higher if short positions are unwound in a squeeze.

Altcoin markets continue to show signs of weakness. Dogecoin (DOGE) has seen open interest rise above 14 billion tokens, a level rarely reached since October, alongside positive funding rates indicating increased demand for long positions. In contrast, declining open interest in bitcoin cash (BCH), chainlink (LINK), and litecoin (LTC) points to capital flowing out of several altcoins.

Order flow data reflects a cautious backdrop. The cumulative volume delta (CVD) shows sellers dominating activity across major tokens such as XRP, solana (SOL), and ether, while only a handful of assets—including bitcoin, M, and CRO—are seeing net buying pressure. This divergence suggests bitcoin’s rally is not yet broadly supported by the wider market.

Volatility remains subdued, with bitcoin and ether’s 30-day implied volatility indices holding near multi-month lows, signaling calm conditions despite geopolitical uncertainty and disruptions in oil markets.

Options markets continue to price in downside risk, with puts trading at a premium to calls on Deribit. However, recent flows show growing interest in bitcoin call options at strike prices between $80,000 and $85,000, indicating expectations for further upside.

Sector performance highlights ongoing weakness in altcoins. CoinDesk’s DeFi Select Index (DFX) fell 2.7%, making it the worst-performing segment, while the broader CoinDesk 20 (CD20) index declined 1.1%. CoinMarketCap’s Altcoin Season Index dropped to 32/100, its lowest level in 10 days, underscoring a continued shift in investor preference toward bitcoin.

A few tokens bucked the broader trend. Spark (SPK) surged more than 70% after being listed on Upbit, South Korea’s largest crypto exchange. Privacy-focused monero (XMR) also outperformed, gaining 3.3%, while dash (DASH) and zcash (ZEC) remained under pressure.

Meanwhile, DeFi tokens stayed on the back foot, with morpho and aave declining 4.6% and 2.8%, respectively, as negative sentiment lingers following the recent $290 million KelpDAO exploit.