Bitcoin closed the $80,000 mark on Tuesday, as new 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 strong rally that began last week, when bitcoin rose more than 20% in three days, its biggest three-day gain since 2023. The rally was fueled in part by a brief squeeze, with more than $4 billion in bearish crypto positions liquidated as prices rose. The gains followed the US Treasury’s announcement that it would double its purchases of longer-term government bonds. The move briefly lowered yields and revived demand for risky assets, while growing concerns about inflation and government debt also boosted interest in perceived scarce assets. Institutional demand has also returned. U.S. spot bitcoin exchange-traded funds attracted $1.92 billion in net inflows last week, their biggest weekly haul since October, when bitcoin hit its previous cycle peak. Still, doubts remain about whether the breakup can last. Bitcoin has been in a prolonged decline since October, and BTIG noted that a similar rally 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 following last week’s brief squeeze suggests bitcoin’s rally may be “longer lasting than a tactical bounce.” It pointed to strong inflows into bitcoin and ether ETFs, increased trading and the creation of more stablecoins that investors typically use to buy cryptocurrencies. Ether last traded 2% higher at $2,494. Activity in the options market also suggests that investors are increasingly confident that the rally can last, the research firm noted. Unlike previous rebounds, when traders were betting primarily on short-term price gains, investors are now paying for exposure to bitcoin gains in the future. Fundstrat also noted that bitcoin recovered without new purchases from Strategy, the world’s largest corporate holder of the cryptocurrency. Strategy hasn’t bought bitcoins for two weeks. If you start buying again while demand for ETFs remains strong, that could provide another boost to prices. Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.
