Key facts
- Bitcoin surged past $85,000, its highest level since late January.
- The rally is attributed to regulatory optimism, strong demand, falling oil prices and yields, and improving technical signals.
- US spot bitcoin ETFs saw $593 million in inflows over Thursday and Friday.
- Open interest in bitcoin has climbed 8% to $55.7 billion.
- Brent crude oil traded around $101 a barrel, down 7% from its peak.
- The 10-year US Treasury yield stood around 4.96%.
Bitcoin has surged past $85,000, reaching its highest level since late January, as market professionals suggest the cryptocurrency is on a long-term uptrend and the "crypto winter" may be over. The digital asset saw a sharp rally in the past week, with investors returning to the market.
Matt Hougan, chief investment officer at Bitwise Asset Management, described the current period as "crypto spring" and predicted the strongest and longest-running bull market in crypto's history. Zach Pandl, head of research at Grayscale, also indicated that bitcoin's bear market phase was likely over, with the token having hit a cycle low around $58,000 in late June.
The rally is being driven by several factors. Regulatory optimism has played a role, with the Securities and Exchange Commission authorizing limited trading of tokenized shares on some blockchain platforms and the Commodity and Futures Trading Commission submitting a new proposal to regulate crypto markets. Although the CLARITY Act failed to pass the Senate, traders appear to be looking past this, anticipating clearer US rules, according to Alice Liu, head of research at CoinMarketCap.
Demand from both retail and institutional investors has been strong. US spot bitcoin ETFs saw $593 million in inflows over Thursday and Friday, counteracting earlier outflows. Open interest in bitcoin, a measure of outstanding derivative contracts, has climbed 8% to $55.7 billion over the last seven days, indicating traders are adding leverage into strength. This is seen as a healthier market composition than during previous failed rallies this year.
Falling oil prices and Treasury yields have also provided a supportive backdrop. Crude prices have tumbled due to easing concerns about Middle East supply disruptions, with Brent crude trading around $101 a barrel on Monday, down 7% from its peak. The benchmark 10-year US Treasury yield has pulled back from the 5% threshold, which is generally interpreted as negative for risk assets. These factors, combined with fading inflation worries and expectations for looser financial conditions, have supported bitcoin demand, according to Konstantinos Chrysikos, director and head of customer relations at Kudo.
Technical signals are also improving. Bitcoin has rallied above the $80,000 mark, a key technical level, and recently flashed a bullish golden cross, a signal that has historically preceded further upside. Analysts at 10x Research noted that their technical and on-chain indicators had been improving and had previously called for a cycle low.
Despite the positive momentum, challenges remain. Rising yields, reflecting higher interest rate expectations, could pressure bitcoin. Markets still anticipate the Federal Reserve to raise interest rates, and firmer inflation readings could limit the rally. Alex Kuptsikevich, chief market analyst at FX Pro, warned that the risk of sharp pullbacks persists.