Bitcoin regained strong momentum on Thursday, rising 8.14% in the last 24 hours to reach approximately $69,567, according to current prices. The cryptocurrency touched $70,089 during trading, continuing its strong upward trend after the surge it recorded in the previous session.
This surge comes after months of selling pressure and sluggish movements, with Bitcoin recovering to levels not seen since early June, driven by declining US Treasury yields and increased investor appetite for riskier assets. The move coincided with the US Treasury Department's announcement that it would double the size of its long-term government bond repurchase operations to at least $4 billion per transaction, up from approximately $2 billion previously.
Investors viewed the Treasury's move as a boost to market liquidity, helping to calm the sharp rise in long-term bond yields. The yield on the benchmark 30-year Treasury note fell to around 5.19% following the announcement, while the 10-year yield also declined, easing some of the pressure on riskier assets.
This coincided with a weakening dollar and improved risk appetite, two factors that typically support dollar-denominated digital assets. Short covering also contributed to the rally, as traders who had bet against Bitcoin were forced to buy back the currency to cut their losses.
Pressure from selling centers ignites the upward trend
The sudden surge in Bitcoin has led to a widespread liquidation of short positions in the cryptocurrency market, after traders who bet on a continued decline found themselves forced to buy the currency when the price rose.
Market data indicates that more than $1 billion of short positions on Bitcoin were liquidated in a short period, while the total short positions that were disposed of across the cryptocurrency market exceeded $2.7 billion, in one of the largest waves of pressure on short positions recorded in recent times.
This explains an important part of the speed of the rise, as the price increase in this case becomes a factor that pushes more traders to close their short positions, which in turn leads to additional purchases and supports the continuation of the rise.
Thus, the recent move was not only the result of a new investment inflow, but also a result of a rapid repositioning in the derivatives market, which made the rise more pronounced and faster than usual moves in the Bitcoin market.
Ethereum outperforms Bitcoin
The rally extended to major cryptocurrencies, with Ethereum posting even greater gains than Bitcoin. Ethereum's price rose 17.18% in the last 24 hours to around $2,245.36, after reaching a high of $2,333.65 during trading.
Ethereum's rise comes after a period of relatively quiet trading, making its break above $2,000 a significant factor in boosting positive momentum. The cryptocurrency also experienced a strong wave of short selling, which contributed to its accelerated rise in recent hours.
Current developments indicate that the positive impact of the Treasury Department's decision was not limited to Bitcoin, but extended to the cryptocurrency market more broadly, with risk appetite shifting from traditional assets to digital assets.
This movement shows the widening scope of the rise, as the rise is no longer limited to the largest currency in terms of market capitalization, but has extended to alternative currencies, some of which have recorded gains that significantly exceed Bitcoin.
Has Bitcoin passed the worst of its downward trend?
Some analysts believe the current move may be a sign that Bitcoin's bear market has passed its worst point, especially after the currency hit lows earlier in the summer before the recent recovery began.
Bitcoin had been under significant pressure since its sharp crash last October, when liquidations triggered widespread turmoil in the cryptocurrency market. Since then, the currency struggled to recover its previous levels before recently receiving a fresh boost in liquidity and improved risk appetite.
Current price action suggests that the $70,000 level has become a significant psychological and technical barrier. A break above this level and a sustained rally could strengthen the likelihood of further gains, while a failure to break through could lead to renewed volatility and profit-taking.
The risks remain, especially since Bitcoin's momentum indicators have approached overbought levels after the sharp rise, meaning the currency may need a period of consolidation or correction before resuming its upward trend if the positive momentum continues.
Bitcoin funds add strength to demand
Alongside movements in the derivatives market, Bitcoin received support from continued investor inflows into US-based spot exchange-traded funds (ETFs). Recent data showed net inflows of approximately $517 million, the largest daily inflow in about three and a half months, reflecting a return of some institutional and traditional investor appetite for the cryptocurrency.
These inflows are particularly significant because they represent actual demand for Bitcoin, unlike the rallies that result solely from short covering. Therefore, the continuation of these inflows into funds may be a more important factor in determining the currency's ability to maintain its current gains.
The decline in Treasury bond yields and the weakening dollar also provide a more favorable environment for non-income assets, which could support the continued flow of liquidity towards gold, cryptocurrencies and other alternative assets.
The Treasury's decision changes the equation of the markets.
The U.S. Treasury Department’s announcement that it would double its long-term bond repurchases was a major turning point in recent market movements, coming at a time when bond yields had reached extremely high levels, amid concerns about inflation, government debt, and borrowing costs.
Although the size of the repurchase operations remains small compared to the enormous size of the U.S. Treasury bond market, the move carried significant implications for investors, as it demonstrated the Treasury Department's willingness to intervene to support liquidity in the long-term bond market when trading conditions become more difficult.
This was quickly reflected across a wide range of markets, with stocks, gold and Bitcoin rising as bond yields fell, while a weaker dollar boosted the appeal of assets denominated in the US currency.
However, this move does not mean that concerns related to debt and inflation have disappeared, as long-term yields remain high, and increased government spending and continued inflationary risks could put renewed pressure on the bond market and high-risk assets.
Bitcoin faces a test of $70,000
Bitcoin opened Thursday at $69,567 after a strong 8.14% surge over the previous 24 hours, during which it reached a high of $70,089. This performance puts the cryptocurrency directly in line to test the $70,000 level, which could prove to be a turning point between the continuation of the recovery and a return to profit-taking.
Ethereum, however, appeared stronger than Bitcoin, rising 17.18% to $2,245.36, reaching $2,333.65 in the last 24 hours.
The current picture suggests that the cryptocurrency market has received a strong boost from declining bond yields, a weaker dollar, and the liquidation of short positions, but continued upward movement will require new investment flows and Bitcoin's ability to break through the $70,000 barrier and maintain its high levels.
Therefore, the current surge represents a significant shift in market sentiment, but it is not enough on its own to prove the start of a long-term bullish cycle. Bitcoin's test of the $70,000 level, along with the movement of bond yields and fund flows, remains one of the most important indicators that will determine whether the current wave is merely a strong pullback or the beginning of a new uptrend.
