Bitcoin Breaches $80,000 Milestone as Spot ETF Inflows and Risk Appetite Fuel Rally

Published: [Current Date]

By Dado Ruvic | Reuters

Bitcoin has surged past the $80,000 mark, driven by a resurgence in spot Bitcoin ETF inflows and an overall improvement in market risk appetite. This latest surge extends a significant rally that began last week, marking its biggest three-day gain since 2023.

The cryptocurrency experienced a more than 20% increase in just three days last week, fueled in part by a substantial short squeeze that liquidated over $4 billion in bearish positions. This upward momentum was further bolstered by the U.S. Treasury's announcement to increase purchases of longer-dated government bonds, which temporarily lowered yields and reignited demand for risk assets. Concerns surrounding inflation and government debt also played a role, driving interest towards assets perceived as scarce, such as Bitcoin.

Institutional demand has notably returned, with U.S. spot Bitcoin ETFs recording $1.92 billion in net inflows last week, the highest weekly figure since October, a period when Bitcoin previously hit its cycle peak. Despite this positive trend, questions linger about the sustainability of the current breakout, especially given Bitcoin's prolonged slump since October. Analysts at BTIG recalled a similar surge in January 2023 that eventually faded before finding support around its 200-day moving average.

However, Fundstrat's analysis suggests that the buying activity following the recent short squeeze indicates a potentially more durable rally than a mere tactical bounce. The firm highlighted strong inflows into both Bitcoin and Ether ETFs, increased trading volumes, and a rise in stablecoin creation – a common precursor to cryptocurrency purchases – as supportive factors.

Other major cryptocurrencies are also seeing gains. Ether (ETH) last traded 1.17% higher at $2,498. XRP (XRP) rose 2.6% to $1.52, marking an impressive approximately 50% increase over the past seven days, according to CoinGecko data.

The options market further indicates growing investor confidence in the sustained nature of this rally. Unlike previous rebounds where traders primarily focused on short-term price increases, current investor activity shows a willingness to pay for exposure to Bitcoin gains further into the future. Fundstrat also pointed out that Bitcoin's rally is occurring without new purchases from MicroStrategy, the largest corporate holder of the cryptocurrency, which has not bought Bitcoin in two weeks. A potential resumption of its buying activity, coupled with continued strong ETF demand, could provide an additional impetus to prices.