Bitcoin Back Above $81,000 and It May Not Be a Simple Bounce

Bitcoin has just undergone a new reversal. A few days after falling below $75,000, the first crypto rebounded to $81,636, its highest level since September 4. Indeed, this recovery comes at the end of a week agitated by the failure of the CLARITY Act, the decisions of the Federal Reserve as well as new regulatory signals from Washington. Behind this increase, another phenomenon attracted attention: the return of spot demand was accompanied by a massive liquidation of short positions.

Bitcoin returns to its highest level since September 4

After having progressed between 76,000 and 77,000 dollars, bitcoin experienced further acceleration this Friday morning. It thus exceeded around 78,350 dollars, before continuing to 81,636 dollars. This intraday high represents its highest level since September 4. Currently, BTC is above $80,900, up more than 5% over the last twenty-four hours. Its capitalization increased from 1540 billion to 1620 billion dollars.

At the start of the week, bitcoin fell below $75,000 after the failure of the CLARITY Act vote. Pessimism was already largely priced in by the market when the FOMC raised rates by 25 basis points. Thus, BTC still remained stuck at $76,000 before this Friday’s movement quickly changed the pattern of trading.

Various levels make it possible to measure the extent of this reversal in a few hours:

• $81,238, intraday high reached Friday;
• More than 5% increase over twenty-four hours;
• 1,620 billion dollars in capitalization, compared to 1,540 billion previously.

Liquidations of short positions amplify the movement

Bearish traders were taken by surprise by this rise. Thus, nearly $238 million in short positions on bitcoin were liquidated in twenty-four hours, compared to only $6 million in long positions. Across the entire crypto market, liquidations of short positions exceeded $470 million, compared to just over $57 million for long positions.

Such an imbalance allows us to have an idea of ​​the violence of this movement. This progression was amplified by forced buybacks while the market was already emerging from a deleveraging phase. Lacie Zhang, research analyst at Bitget Wallet, think that bitcoin benefits from a global movement back towards risk, while “oil and long-term US bond rates ease”.

Also, it specifies the role of repurchases of short positions. Leverage, largely purged earlier this month, would have left a market more sensitive to the return of spot buying.

CFTC and spot ETFs support climate change

This rebound is not only due to liquidations. The Commodity Futures Trading Commission has sent draft rules affecting the crypto market to the White House. After the bill was blocked in the Senate, the CFTC therefore intends to use the powers provided to it by the current texts.

As for the SEC, it should follow a parallel administrative path. This sequence then reveals a shift in regulatory action towards executive agencies after the failure of the legislative process in Congress.

Other support comes from spot demand. Indeed, Lacie Zhang mentions nearly $154 million in daily entries into American Bitcoin ETFs. The latter also links the move to easing oil and long-term Treasury yields.

Such elements provide a basis for the rebound that is different from a simple speculative movement. So we see a combination of spot demand, leverage reduction and regulatory catalyst.

This return above $80,000 therefore puts bitcoin back in a zone beyond the reach of sellers. The continuation of this movement will depend on the persistence of flows towards spot ETFs, the maintenance of contained leverage and the concrete translation of the initiatives of the CFTC and the SEC.