Source : INDIA TODAY NEWS
Bitcoin has crossed the $70,000 mark, extending a sharp recovery in the cryptocurrency market. The world’s largest cryptocurrency was trading at $71,933.44 at the time of writing, at around 3.15 pm, up 11.8% over the previous 24 hours.
The latest rally has been supported by a mix of improving market liquidity, strong institutional buying, short covering and growing optimism around crypto regulation.
advertisement
Here are five key factors behind Bitcoin’s latest move.
US TREASURY BUYBACKS BOOST RISK APPETITE
One of the key triggers for the rally has been the US Treasury’s decision to increase bond buybacks. Higher buybacks have helped push Treasury yields lower, making riskier assets such as cryptocurrencies more attractive to investors.
Roshan Aslam, Co-founder and CEO of GoSats, said the move in Treasury buybacks had helped improve risk appetite across markets.
“ The US Treasury doubling its bond buybacks pulled yields down and lifted risk appetite broadly, and that got compounded by a short squeeze,” Aslam said.
Rajagopal Menon, Vice President at WazirX, also pointed to the macroeconomic backdrop as one of the factors supporting Bitcoin. “Higher Treasury buybacks are improving liquidity and easing bond yields, which creates a more supportive environment for risk assets,” Menon said.
SHORT SELLERS RUSH TO COVER POSITIONS
The rally has also been fuelled by a short squeeze. This happens when traders who had bet on Bitcoin falling are forced to buy the cryptocurrency to close their positions as prices rise.
That buying can push prices even higher, creating a chain reaction.
Aslam said traders who had bet against Bitcoin were forced to cover their positions, adding “real fuel” to the rally.
BITCOIN WHALES ARE ACCUMULATING
Another factor supporting the recovery is buying by large Bitcoin holders, commonly referred to as whales.
According to Aslam, whale wallets have added nearly $3 billion worth of Bitcoin over the past couple of months. This suggests that at least some of the buying is based on accumulation rather than short-term trading.
“Underneath both of those, whale wallets have quietly added close to $3 billion over the past couple of months, so there’s genuine accumulation happening too, not just noise,” he said.
STRONG INSTITUTIONAL DEMAND THROUGH ETFS
US spot Bitcoin exchange-traded funds (ETFs) have also seen strong inflows, pointing to continued interest from institutional and other traditional investors.
Menon said $517 million flowed into US spot Bitcoin ETFs, while Ethereum ETFs saw around $189 million in inflows on August 19. There were also smaller inflows into XRP and Solana ETFs.
“Crypto-native momentum is strengthening, with $517 million flowing into U.S. spot Bitcoin ETFs, around $189 million in ETH ETFs on August 19, with smaller inflows into XRP and SOL,” Menon said.
These inflows are important because they provide another channel for investors to gain exposure to cryptocurrencies without directly holding the underlying tokens.
IMPROVING REGULATORY OUTLOOK
The regulatory environment is another factor adding to investor confidence.
Menon said the White House is pushing for clearer rules for cryptocurrencies, while the US Securities and Exchange Commission (SEC) is proposing a framework that could provide greater regulatory certainty for established networks such as Bitcoin and Ethereum.
“Regulatory sentiment is turning more constructive,” Menon said, adding that these developments could create a stronger foundation for Bitcoin’s current momentum.
What next for Bitcoin?
While Bitcoin’s move above $70,000 has renewed optimism, analysts also caution against chasing the rally.
Aslam said Bitcoin has moved sharply over the past year, falling from around $126,000 to the low $60,000s before recovering above $70,000. He believes investors trying to time every move can find it difficult to navigate such swings.
“My honest take is that this is exactly the kind of moment where chasing the price rarely works out,” Aslam said.
He added that investors may be better served by maintaining a steady approach based on their individual risk appetite and financial goals.
Bitcoin is now trading around its 200-day average, according to Aslam. He also noted that market sentiment has moved from fear to greed very quickly as the rally gathered pace.
“That’s the piece worth watching closely over the next week or two,” he said.
– Ends
SOURCE :- TIMES OF INDIA
