Bitcoin Pauses Near $80,000 as Spot Demand Seen Key to Sustaining Rally

Bitcoin is holding near $80,000 after breaking out of its previous range, but the rally will need support from spot buying after being driven in part by short liquidations, Bitfire Research said.

In a report published on Aug. 25, the Hong Kong-based digital-asset research firm said Bitcoin has been fluctuating around $80,000 after moving above its earlier trading band. The token rebounded quickly from its lows and has held near previous highs without a clear breakdown, showing some characteristics typically seen in the early stages of a bull market.

Still, Bitfire Research said it is too early to confirm the recent advance as the start of a new uptrend. Much of the rally was led by forced short liquidations rather than sustained spot buying. The key question now is whether spot demand can take over as the market's main source of momentum.

US spot Bitcoin exchange-traded funds have recently recorded net inflows of about $1.92 billion. The firm cited continued ETF inflows, sustained buying by institutional investors and a return of the Coinbase premium to positive territory as key indicators to watch.

Technically, it also flagged the possibility of short-term overheating. Bitcoin's 14-day relative strength index, or RSI, has climbed to about 78. Bitfire Research put short-term resistance at $78,500 to $82,000 and support at $72,400 to $73,500.

Over the next month, US crypto regulation and macroeconomic events may also influence market direction. The firm pointed to a procedural vote on the Clarity Act, the US Securities and Exchange Commission's request for comment on its crypto regulatory framework, the September Federal Open Market Committee meeting, the personal consumption expenditures price index and employment data.

The immediate test is whether spot demand can replace short covering as the market's main driver, Bitfire Research added. If institutional participation, regulatory progress and capital flows continue together, the move could mark the start of a new market cycle rather than a simple short squeeze.