Bitcoin Sentiment Revives Despite US Crypto Bill Failure, Rate Hike as Token Reclaims $85,000

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

$1 Billion in Net Inflows to US ETFs

Optimism Builds Ahead of US-China Summit

‘20-Year Bitcoin Holding Bill’ Adds Support

Overheated Positioning Triggers ‘Extreme Greed’ Warning

Bitcoin is rebounding despite a series of headwinds. The rally has persisted even after Congress failed to pass the CLARITY Act, a US crypto market structure bill, and after interest rates were raised. Experts say Bitcoin has become more attractive as the chances increase that it could become a strategic asset for the US government. Falling US Treasury prices and lower oil prices have also boosted the investment case for cryptocurrencies.

◇ Bitcoin Gains 10% in a Week

According to global crypto data provider CoinMarketCap, Bitcoin traded at $86,597 as of 9 a.m. on September 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 giving back some gains. It was trading in the $85,000 range later in the day. Bitcoin’s return above $85,000 marks the first time it has reclaimed that level since January, ending an eight-month gap.

The recent advance has been steep. Bitcoin traded at $76,405 on September 18 and has risen by about $10,000 in four days. South Korea saw a similar pattern. Bitcoin traded at 117.12 million won, or about $86,000, at 9 a.m. on September 22, up 5.4% from a day earlier. That was a 10.8% gain from 105.68 million won, or about $77,600, a week earlier.

Institutional money is also flowing in. Farside Investors data showed the 12 spot Bitcoin exchange-traded funds listed in the US recorded net inflows of $999 million on September 21. That followed inflows of $159.5 million on September 17 and $433 million on September 18, extending the streak to three straight trading days.

Market sentiment has also improved quickly. Alternative’s Crypto Fear & Greed Index stood at 78 on September 22, placing it in the “Extreme Greed” zone. That means investor enthusiasm has climbed to near-overheated levels. The reading jumped eight points in a day from 70, which was in the “Greed” range.

◇ Inflation Is the Biggest Variable

Bitcoin lost momentum after an early-month surge as negative developments piled up. The US Senate rejected the CLARITY Act on September 15, reducing the likelihood that it will pass this year. The Federal Reserve’s 25-basis-point rate increase on September 16 also added pressure to the crypto market.

Markets appear to view much of that bad news as already priced in, helping support Bitcoin’s latest rise. Lower global oil prices have also eased concerns about stubborn inflation. Optimism has spread across broader asset markets ahead of a summit between US President Donald Trump and Chinese President Xi Jinping scheduled for September 24.

Expectations for further gains are also building. The US House Financial Services Committee approved the Modernizing America’s Reserves Act on September 16. At the heart of the bill is a plan to manage Bitcoin held by the US government as a long-term national reserve asset. If enacted, it would require the US government to hold Bitcoin secured as a strategic reserve asset for at least 20 years.

Macro risks remain. The war between the US and Iran has not ended, and attacks on Saudi Arabia by Yemen’s Houthi rebels, which are backed by Iran, have continued. Governments around the world are also raising interest rates, tightening monetary conditions further. Bitcoin typically moves in the opposite direction of interest rates.

Because prices have risen sharply in a short period, profit-taking may also emerge. Kim Min-seung, head of research at Korbit, said many investors entered the market anticipating the recent recovery, but the direction of the crypto market will depend on how inflation develops. He compared the outlook to typhoon season, saying a single storm does not mean the risks are over.

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