Bitcoin has broken back above US$81,000 as momentum builds across cryptocurrency markets, putting the world’s largest digital asset within striking distance of a level analysts see as crucial to confirming the next stage of its recovery.
Bitcoin was trading around US$81,100 at the time of writing, up roughly 2.8% on the session, after dropping as low as about US$78,600 earlier in the day.
The move extends a powerful August rebound and takes Bitcoin into a significant technical resistance zone between US$81,000 and US$86,000. Glassnode says this is where a large concentration of longer-term holders are approaching break-even levels, potentially creating additional selling pressure.
US$83,000 emerges as next major test
Attention is now turning to the US$83,000-US$83,300 area.
CryptoQuant said Bitcoin has entered the early stages of a new bull market but needs to move above its 365-day moving average, currently around US$83,100, to provide stronger confirmation of the trend.
Glassnode similarly identified a sustained move above roughly US$83,300, accompanied by continued exchange-traded fund demand, as evidence that Bitcoin is successfully absorbing the substantial supply sitting overhead.
A break through that area could open the way toward the upper end of the US$81,000-US$86,000 resistance band and potentially January's higher price levels.
ETF buyers provide support
Institutional demand remains an important part of the rally.
US spot Bitcoin ETFs recorded around US$232 million of net inflows on Wednesday, extending their buying streak to eight consecutive sessions and taking total inflows during the run to about US$2.8 billion.
Over seven sessions alone, inflows reached roughly US$2.5 billion, the strongest such stretch since October, according to Dow Jones Market Data.
The renewed buying has helped turn what initially began as a sizeable short squeeze into a broader rally supported by spot demand.
‘Debasement trade’ drives demand
Bitcoin has also benefited from renewed concern over US government debt and the long-term value of the dollar.
The US Treasury's decision to double purchases of longer-dated government debt has helped fuel what markets are calling the “debasement trade”, with investors moving toward scarce assets including Bitcoin and gold.
BlackRock head of digital assets Robbie Mitchnick said this week that Bitcoin's potential role as a monetary alternative and portfolio diversifier had returned to the forefront as investors focus on government deficits, debt and currency debasement.
Options expiry adds another catalyst
Traders are also watching a sizeable derivatives event on Friday.
Around 81,700 Bitcoin options worth US$6.44 billion are due to expire on Deribit, with significant call positioning concentrated around the US$75,000 and US$80,000 strikes.
That could generate additional volatility as Bitcoin attempts to establish itself above US$81,000.
For now, the immediate battle has shifted higher. After repeatedly struggling around US$80,000-US$81,000 earlier this week, Bitcoin has pushed through the lower end of its major resistance zone.
The next question is whether buyers have enough momentum to take out US$83,000 — a move that could provide much stronger evidence that the August rebound is developing into a broader Bitcoin bull-market reset.