Bitcoin Sentiment Revives Despite Failed Crypto Bill, Rate Hike as Price Reclaims $85,000

Bitcoin Reclaims $85,000 for First Time in Eight Months, Up 10% in a Week

$1 Billion in Net Inflows to U.S. ETFs

Optimism Builds Ahead of Trump-Xi Summit

‘20-Year Bitcoin Holding Act’ Adds Support

Overheated Sentiment Triggers ‘Extreme Greed’ Warning

Bitcoin is rebounding through a series of setbacks. Its gains have held even after Congress failed to pass the CLARITY Act, a U.S. crypto market structure bill, and after benchmark interest rates were raised. Market watchers say Bitcoin is drawing support from growing expectations that it could become a strategic asset for the U.S. government. Falling U.S. Treasury prices and lower oil prices have also lifted the investment case for digital assets.

◇ Bitcoin Jumps 10% in a Week

According to CoinMarketCap, Bitcoin was trading at $86,597 as of 9 a.m. on Sept. 22. That was up 6.7% from $81,143 a day earlier. It rose as high as $87,281 at about 5:30 a.m. before easing back into the $85,000 range later in the day. Bitcoin had not reclaimed $85,000 since January, returning to that level for the first time in eight months.

The recent rally has been sharp. Bitcoin traded at $76,405 on Sept. 18 and added about $10,000 in four days. South Korea saw a similar pattern. As of 9 a.m. on Sept. 22, Bitcoin was trading at 117.12 million won, up 5.4% from a day earlier. That compares with 105.68 million won a week earlier, a gain of 10.8%.

Institutional money has continued to flow in. Farside Investors data show the 12 U.S.-listed spot Bitcoin exchange-traded funds recorded net inflows of $999 million on Sept. 21. That followed net inflows of $159.5 million on Sept. 17 and $433 million on Sept. 18, extending the streak to three straight trading days.

Investor sentiment has also improved quickly. Alternative’s Crypto Fear & Greed Index stood at 78 on Sept. 22, in the “extreme greed” zone. That means market enthusiasm has risen to near-overheated levels. The reading jumped 8 points in a day from 70, which had indicated “greed.”

◇ Inflation Is the Biggest Variable

Bitcoin, which had surged earlier this month, lost momentum after back-to-back negative developments. The U.S. Senate voted down the CLARITY Act on Sept. 15, reducing the chances of passage this year. The Federal Reserve’s 0.25 percentage-point rate increase on Sept. 16 also weighed on the crypto market.

Markets appear to view much of that bad news as already priced in, helping lift Bitcoin. Lower global oil prices have also eased concerns about stubborn inflation. Optimism has spread across asset markets ahead of a planned Sept. 24 summit between U.S. President Donald Trump and Chinese President Xi Jinping.

Expectations for further gains have persisted. The U.S. House Financial Services Committee approved the Modernizing America’s Reserves Act on Sept. 16. The bill’s core provision is to manage Bitcoin held by the U.S. government as a long-term national reserve asset. If enacted, the U.S. government would have to hold Bitcoin secured as a strategic reserve asset for at least 20 years.

Macro risks, however, remain. The war between the U.S. and Iran has not ended, and attacks on Saudi Arabia by the Iran-backed Houthi rebels have continued. Another variable is the stronger pace of global monetary tightening as governments raise benchmark rates. Bitcoin typically moves in the opposite direction of interest rates.

After such a steep climb in a short period, profit-taking is also possible. Kim Min-seung, head of research at Korbit, said many investors entered the market expecting a rebound, but inflation will determine the direction of the crypto market. He compared the risk to a typhoon that does not strike just once and then disappear for good.

Park Si-on, Hankyung.com reporter ushire908@hankyung.com