Bitcoin Retakes $80,000 As Choppy US Demand Tests The Rally

The mixed signals leave Bitcoin caught between an improving market backdrop and questions about the durability of the buying behind its rebound.

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The cryptocurrency jumped as much as 5.7% on Thursday as stocks rose, Treasury yields fell and the dollar weakened after Federal Reserve Governor Christopher Waller signaled he would support keeping interest rates unchanged if inflation continues to ease.
(Photo: Bloomberg News)
Bitcoin is back above $80,000. The question is whether it can stay there.

The cryptocurrency jumped as much as 5.7% on Thursday as stocks rose, Treasury yields fell and the dollar weakened after Federal Reserve Governor Christopher Waller signaled he would support keeping interest rates unchanged if inflation continues to ease. The move pushed Bitcoin briefly to the highest price since May, though it remains within its recent trading range. The latest rally gives Bitcoin another shot at holding a level it has repeatedly failed to sustain. 

That test comes with demand from US investors still looking uneven. Inflows into US-listed spot Bitcoin exchange-traded funds picked up in August but have proven inconsistent, including two days of sizable outflows in the past week. The seven-day average of the Coinbase premium, which compares prices on the largest US exchange with international platforms, has also remained negative for more than four months.

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"We would like to see higher time frame confirmation alongside continued positive ETF flows before viewing this as a confirmed breakout from the range Bitcoin has traded in since Aug. 2," said Jake Kennis, senior research analyst at Nansen. "A sustained daily close above the upper end of that range would provide a stronger signal that the market is moving beyond the recent consolidation."

The mixed signals leave Bitcoin caught between an improving market backdrop and questions about the durability of the buying behind its rebound. Glassnode said the seven-day average intake for the ETFs reached $290 million a day during the rally, but trading activity remained subdued compared with previous bull runs.

"A sustained move above $82,000, backed by persistent ETF inflows and restrained funding, would provide stronger confirmation that the market is ready for another leg higher," said Lacie Zhang, a research analyst at Bitget Wallet.

"Inflows driven by discrete policy headlines that lack broader market velocity often coincide with local inflection points," Glassnode said in a note.

A hawkish speech from Federal Reserve Chairman Kevin Warsh at the Jackson Hole symposium last week had revived expectations that the central bank may raise rates again if inflation stays elevated. The policy-setting Federal Open Market Committee is scheduled to meet Sept. 15 and 16.

Bitcoin also faces a possible price ceiling. Glassnode estimates that long-term holders are targeting the $83,000 and $86,000 range to sell their Bitcoin, leaving the cryptocurrency below the zone where investors are expected to take profits.

"The lower liquidity right now means that small shifts in sentiment like this can have outsized impacts," said Adam McCarthy, head of research at trading firm LO:TECH.

A significant portion of the August rally appeared to be supported by a short squeeze, leaving questions around how much higher Bitcoin could be expected to go in the current environment.

"We suspect that a good chunk of that rally was driven by short covering, which has left positioning close to flat," said Tony Sycamore, an analyst at IG Australia. "Technically we continue to expect dips back into the mid to low $70s to be well supported by buyers leaning against the 200-day moving average at $69,507."

ALSO READ: Bitcoin Breakout Fades Amid Choppy US Demand, Hawkish Fed

Bitcoin was up about 5.3% to $81,475 in late New York trading on Thursday. That's down about 35% from an all-time high reached last October.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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