Bitcoin Nears $80,000 as Short Liquidations, ETF Inflows Stoke Rally Bets

Bitcoin’s climb toward $80,000 is fueling expectations that the broader cryptocurrency rally may have more room to run.

Bloomberg reported on Aug. 23 that Bitcoin notched its strongest weekly gain in years and approached $80,000. After months of declines, the token has rebounded sharply in a short span, quickly shifting market sentiment.

A key catalyst was a shift in the U.S. bond market. Treasury Secretary Scott Bessent said he plans to at least double long-term Treasury buybacks, sending long-dated yields briefly lower and weakening the dollar. Gold advanced as well, bringing the so-called debasement trade back into focus.

The debasement trade refers to buying supply-constrained assets such as gold or Bitcoin as a hedge against the erosion of fiat-currency value amid rising government debt and fiscal strain. Bridgewater founder Ray Dalio has also recently flagged unsustainable debt growth and drawn attention to Bitcoin.

“It’s very welcome to see vitality returning to crypto markets,” said Noel Acheson, author of the Crypto Is Macro Now newsletter. “This rally feels different from the shaky rebounds seen over the past few months.”

Traders are now watching whether the move proves to be a brief rebound or extends by attracting fresh buying. In past bull markets, Bitcoin gains triggered short liquidations, followed by new money flowing into spot exchange-traded funds and crypto-related stocks, which then pushed prices higher again.

That pattern began to re-emerge last week. Bitcoin short liquidations reached their largest scale since 2021. Spot trading volume also rose, while U.S. spot Bitcoin ETFs recorded more than $1 billion in net inflows over the week. That has strengthened the case for further gains, as the market is drawing in fresh capital rather than relying only on forced short covering.

The U.S. regulatory backdrop also helped support sentiment. President Donald Trump recently renewed his call for Congress to pass the CLARITY Act, a cryptocurrency market structure bill.

Trump’s push is lowering the regulatory risk premium, according to Rachael Zhang, a research analyst at Bitget Wallet. Clear rules are important because they make it easier for institutional investors to assess crypto investment risks and enter the market, she added.

Technical indicators also signaled strength. Bitcoin has climbed back above both its 100-day and 200-day moving averages, two widely watched trend gauges. The 14-day relative strength index, however, has moved into territory typically considered overbought.

Standard Chartered also left room for further upside. Geoffrey Kendrick, the bank’s global head of digital assets research, said record short liquidations and weekly spot ETF net inflows of more than $1 billion could attract additional capital and eventually bring leveraged investors back into the market.

“For the first time this year, there is a risk that my year-end target of $100,000 is too low,” Kendrick said. “Investors are again recognizing how quickly prices can rise, and after Oct. 6 there is a chance Bitcoin could overshoot toward its all-time high of $126,000 before year-end.”

Still, some caution it is too early to declare the start of a full-fledged uptrend based on this surge alone. Bitcoin has recovered to levels last seen in May, but it remains about 43% below the all-time high reached in October last year. The early phase of the rally was also driven by large-scale short liquidations.

In the end, the durability of the rebound may hinge on whether real buying demand persists after the effect of short covering fades. Bitcoin has repeatedly surrendered gains this year when rebounds failed to draw in fresh buyers.

“Encouraging signs are emerging,” said Tanay Ved, a senior analyst at Talos. “As prices kept rising, we saw more than just short covering. New buying also started to come into the market.”