NEW YORK: Bitcoin surged past the $80,000 mark Tuesday, extending a sharp rally fueled by renewed inflows into spot bitcoin exchange-traded funds and improving investor risk appetite.
The flagship cryptocurrency jumped more than 2% to $80,501, continuing a climb that began last week when it posted its largest three-day gain since 2023, rising over 20%. The move was partly driven by a short squeeze that liquidated more than $4 billion in bearish crypto positions, according to market data.
The rally gained momentum after the U.S. Treasury announced it would double its purchases of longer-dated government bonds, a move that briefly pushed yields lower and revived demand for risk assets. At the same time, growing concern over inflation and government debt has boosted interest in assets perceived as scarce, including bitcoin.
Institutional demand has returned in force. U.S. spot bitcoin ETFs attracted $1.92 billion in net inflows last week, their largest weekly haul since October, when bitcoin reached its previous cycle peak, according to fund flows data.
Despite the gains, analysts caution whether the breakout can be sustained. Bitcoin had been in a prolonged slump since October, and BTIG noted that a similar surge in January 2023 initially faded before the cryptocurrency found support around its 200-day moving average.
Fundstrat, in a note Monday, said the buying that followed last week’s short squeeze suggests bitcoin’s rally may be “more durable than a tactical bounce.” The firm pointed to strong inflows into bitcoin and ether ETFs, increased trading volumes, and the creation of more stablecoins, which investors often use to purchase cryptocurrencies.
Options market activity also indicates growing confidence that the rally can persist, Fundstrat said. Unlike earlier rebounds, when traders mainly bet on short-term price gains, investors are now paying for exposure to bitcoin gains further into the future.
Fundstrat also noted that bitcoin rallied without fresh purchases from Strategy, the world’s largest corporate holder of the cryptocurrency, which has not bought bitcoin for two weeks. If it resumes buying while ETF demand remains strong, that could provide another boost to prices, the firm said.
Other cryptocurrencies also advanced. Ether last traded 1.17% higher at $2,498, while XRP rose 2.6% to $1.52 and is up about 50% over the past seven days, according to pricing from CoinGecko.
