On Tuesday, Bitcoin rose 3.1% to $79,739, nearing the $80,000 threshold, following a rally that began last week with a more than 20% increase over three days, the largest since 2023. This surge was partly attributed to a short squeeze that liquidated over $4 billion in bearish positions. The U.S.
Treasury's decision to double its purchases of longer-dated government bonds contributed to lower yields, enhancing the appeal of risk assets and increasing interest in scarce assets like Bitcoin amid inflation concerns. Institutional interest has also surged, with U.S. spot bitcoin ETFs seeing $1.92 billion in net inflows last week, the highest since October when Bitcoin previously peaked.
However, analysts express caution about the sustainability of this rally, referencing past surges that faded. Fundstrat noted that the recent buying activity suggests a potentially more durable rally, supported by strong inflows into bitcoin and ether ETFs and increased trading activity.
The options market indicates growing investor confidence in the longevity of this rally, with a shift towards longer-term exposure rather than short-term gains. Additionally, the world's largest corporate holder of Bitcoin, Strategy, has not made purchases in two weeks, but renewed buying alongside strong ETF demand could further elevate prices