Bitcoin closed in on the $80,000 mark on Tuesday, as renewed inflows into spot bitcoin ETFs and improving risk appetite extended the cryptocurrency’s recent rally.
The flagship cryptocurrency jumped 3.1% to $79,739.
The latest move extends a sharp rally that began last week, when bitcoin surged more than 20% in three days, its biggest three-day gain since 2023. The rally was fueled partly by a short squeeze, with more than $4 billion in bearish crypto positions liquidated as prices rose.
The gains followed the U.S. Treasury’s announcement that it would double its purchases of longer-dated government bonds. The move briefly pushed yields lower and revived demand for risk assets, while growing concern over inflation and government debt also boosted interest in assets perceived as scarce.
Institutional demand has also returned. U.S. spot bitcoin exchange-traded funds attracted $1.92 billion in net inflows last week, their largest weekly haul since October, when bitcoin reached its previous cycle peak.
Still, questions remain over whether the breakout can last. Bitcoin has 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.
In a note on Monday, Fundstrat said the buying that followed last week’s short squeeze suggests bitcoin’s rally may be “more durable than a tactical bounce.” It pointed to strong inflows into bitcoin and ether ETFs, increased trading, and the creation of more stablecoins which investors often use to buy cryptocurrencies.
Ether last traded 2% higher at $2,494.
Activity in the options market also suggests investors are becoming more confident that the rally can last, the research firm highlighted. 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. Strategy has not bought bitcoin for two weeks. If it starts buying again while ETF demand remains strong, that could provide another boost to prices.
