Bitcoin prices surged to an eight-month high on Monday to cross the $85,000 mark, amid stronger inflows of exchange-traded funds, regulatory developments and an improvement in risk sentiment.
The world's biggest cryptocurrency rose as much as 5 per cent to $85,200 before slipping to $84,473 on Monday afternoon, according to data from CoinMarketCap.
Bitcoin recovered from last week’s drop below $76,000, supported by “stronger ETF inflows, regulatory developments and a sharp squeeze in bearish positions”, said Naeem Aslam, chief investment officer at Zaye Capital Markets.
The surge came even after tighter monetary policy, showing that institutional demand is currently absorbing part of the pressure from higher interest rates, he said. The US Federal Reserve raised interest rates for the first time in three years last week.
The rally also comes ahead of a summit between US President Donald Trump and China’s Xi Jinping, which has been supporting markets.
“A more constructive tone ahead of talks with China can improve general risk appetite across equities, technology and digital assets, while continued tension involving Iran and sanctions can increase market volatility and defensive positioning,” Mr Aslam said.
The cryptocurrency fell last week after the long-awaited Clarity Act, which aims to create a clear regulatory framework for cryptocurrencies in the US, was blocked in the Senate.
“What does this mean for crypto markets in the US? For now, they will operate based on a patchwork of existing rules, regulations, court decisions and the already-enacted Genius Act for stablecoins,” said Carsten Menke, head of next generation research at Julius Baer.
“A consistent regulatory framework would of course be welcome, but we would also argue that regulation does not drive adoption. Superior new solutions do,” he added, citing the examples of prediction markets, trading platforms and stablecoin-linked credit cards.
Mr Aslam also stressed that Bitcoin remains more directly sensitive to liquidity, the dollar, Treasury yields and institutional flows rather than to political statements.
“Regulatory measures that allow more tokenised asset activity and clearer digital-market frameworks can strengthen confidence in the wider blockchain ecosystem by reducing uncertainty around how institutional products and trading venues will operate,” he said.
“If broader risk appetite strengthens while US regulatory clarity improves, Bitcoin can benefit from both speculative demand and deeper institutional participation; if geopolitical stress instead pushes yields and the dollar higher, that support could weaken.”
