Bitcoin surged past $80,000 for the first time since mid-May, as optimism returned to the long-stricken cryptocurrency market, amid a confluence of bullish signals that forced the unwinding of billions of dollars in debt-funded bets.
The leading cryptocurrency rose as much as 2.9% to $81,257 on Tuesday in Asia, a level not seen since May 15, and was trading at around $80,700 by 1:45 p.m. in Singapore. The surge followed a 23% jump in the seven days to Sunday, its biggest weekly gain in nearly three years. However, the currency remains well below its peak of around $126,000 reached in October.
Bitcoin has returned to the spotlight as talk of a currency devaluation trade has resurfaced, after US Treasury Secretary Scott Bessent announced last week that the United States would increase its bond buybacks in an effort to lower long-term yields, sparking a new round of dollar selling.
Skeptics saw the plan as further evidence that the Trump administration was still unprepared for the difficult task of reducing the budget deficit. Bitcoin was originally created as a way to avoid the devaluation of fiat currencies and the inflation caused by central banks creating money.
Lacey Chang, a research analyst at Bitget Wallet, said: The macroeconomic backdrop has become more supportive after the Treasury's expanded plan to repurchase long-term bonds helped weaken the dollar and revive the currency devaluation trade in both Bitcoin and gold.
Record inflows into Bitcoin funds
Bitcoin spot funds exchange-traded funds (ETFs) saw their strongest weekly inflows in 10 months last week as the cryptocurrency surged. The 13 US-listed ETFs attracted net inflows of $1.92 billion, the largest since early October of last year, according to data compiled by Bloomberg. The funds also recorded net inflows of $337 million yesterday.
The cryptocurrency market received an additional boost on the day of Besent's announcement, following a meeting between President Donald Trump and industry leaders. The meeting revived optimism regarding the administration's commitment to cryptocurrencies.
Legislative momentum had recently slowed after the Clarity Act, a market-structuring bill, failed to reach a vote before the Senate recess in August. Trump has urged the Senate to pass the bill, and it is expected to be reintroduced in mid-September.
The subsequent surge in Bitcoin's price surprised many traders. Debt-funded bearish bets worth approximately $7.2 billion were liquidated across all cryptocurrencies last week, according to Coinglass data.
Cryptocurrency traders had been searching for a market bottom for months. Bitcoin declined for most of 2026, following a sell-off last October that came immediately after it reached its all-time high.
However, doubts remain. Analysts pointed out that the pressure on short positions was the main driver of the price increase, suggesting that demand may not be sustainable.
Alan Deng, a director at Bitfire Research, said that the Bitcoin breakout has some features of the early stage of a bull market, but should not be considered a definite trend yet.
Ding added in a note: “The immediate test is whether spot market demand can replace short covering as the primary driver of market momentum. If institutional participation, regulatory progress, and capital flows continue to reinforce each other, the current rally may represent more than just a short-covering wave and could be the start of a new market cycle.”
