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(Dan Tri Newspaper) – Bitcoin surged 25% in two days, surpassing $78,000, then unexpectedly reversed course and fell.
On the evening of August 22nd, Bitcoin fell nearly 1%, to around $76,900 after a sharp increase in the preceding days. Since August 20th alone, Bitcoin had surged by approximately 25%, at one point surpassing $78,000. This development triggered a strong bull run in the cryptocurrency market, but also quickly revealed signs that the upward momentum might not be entirely stable.
US capital flows are boosting Bitcoin.
One of the key drivers of the rally came from the US bond market. The US Treasury announced an increase in the size of its long-term government bond repurchase program from $2 billion to $4 billion per cycle. This news pushed the yield on 30-year Treasury bonds from 5.34% down to around 5.19%.
When bond yields fall, holding assets with the potential to appreciate in value, such as bitcoin, can become more attractive to some investors. This is one of the factors contributing to the return of money to the cryptocurrency market.
The surge was also fueled by the liquidation of approximately $4 billion in bearish bitcoin bets over two days, August 20-21. As the price of bitcoin rose rapidly, these investors were forced to buy bitcoin to close their positions and limit losses. The buying pressure generated by this continued to push the price up, leading to the closure of even more positions.
However, Jeff Ko, an analyst at CoinEx, argues that the impact of the US bond buyback program needs to be viewed cautiously. According to him, this is primarily a measure to make older bonds more tradable and to restructure the US government ‘s debt, rather than a large-scale money-printing program like monetary easing measures.
Shawn Young, chief analyst at MEXC Research, also believes the cryptocurrency market is reacting more strongly to the actual impact of bond policy. The large volume of previous bearish bets on bitcoin created the conditions for a sharp surge as investors were forced to close their positions en masse.
“The bond market has opened a relief valve, but cryptocurrencies are reacting as if policy has completely changed,” Young observed.
According to Young, US government bonds are still competing with bitcoin for capital inflows. If 10-year bond yields rise back above 4.7% and 30-year yields move toward 5.3%, bitcoin’s upward momentum could come under renewed pressure.
Himanshu Sahay, co-founder and CTO of Arch Lending, believes that the evolution of long-term bond yields is increasingly influencing the market. According to him, Bitcoin is rising but hasn’t yet shown a clear upward trend; it may still be waiting for new demand to break out of its current price range.
Sahay argues that what’s worth watching isn’t just whether bond yields are rising or falling, but whether the increase in yields begins to impact inflation expectations and investor sentiment toward risky assets. If this happens, bitcoin could face further pressure.
Where is Bitcoin headed?
Gracy Chen, CEO of Bitget, believes it’s difficult to predict whether Bitcoin will end the year above or below $70,000, as interest rates and the economic situation could change significantly in the coming months.
If interest rates rise again, bitcoin could face downward pressure. As the cryptocurrency becomes increasingly integrated into traditional financial markets, it is also more sensitive to changes in interest rates and capital flows.
Instead of setting an overly ambitious price target, Ms. Chen predicts that Bitcoin is likely to remain in its current price range by the end of the year. In her conservative forecast, Bitcoin could end the year either higher or lower than its current level by approximately $10,000-$20,000.
Ms. Chen also does not expect the US government to directly purchase more bitcoin to add to its national reserves in the near future. This is unlikely to happen in the next two years, as the US government’s proactive purchase of bitcoin would be a major policy decision requiring discussion among lawmakers and political parties.
Meanwhile, Ko argues that the $69,000 mark is crucial for bitcoin. This is the average price of bitcoin over the past 200 days and is often used by investors to assess long-term trends.
If Bitcoin holds above $69,000 and turns this level into a support zone, the upside outlook will be more positive. Conversely, if Bitcoin falls below this threshold, the current recovery momentum could face further pressure.
Inflows into bitcoin funds are also supporting the market. Bitcoin funds traded on US stock exchanges recorded approximately $650 million in net inflows this week. This money is providing additional buying power as investors betting on price declines are forced to close their positions.
However, bitcoin still has to compete with US government bonds to attract capital. While investors can receive yields of around 4-5% from an asset considered relatively safe, bitcoin needs sufficiently attractive upside prospects to continue attracting investment.
Therefore, the recent surge does not necessarily mean that Bitcoin has entered a new bull cycle. If bond yields continue to fall, the inflow of funds into Bitcoin funds remains positive, and new buying demand increases, the price could continue to be supported. Conversely, if interest rates rise, bond yields rebound, or investor sentiment towards risky assets weakens, Bitcoin could face downward pressure.
At around $76,900, Bitcoin remains significantly higher than the $64,000 level just a few days ago. After a sharp surge followed by a reversal, the market is waiting to see if new capital inflows will be strong enough to sustain Bitcoin at this high price level, or if the recovery will stall under pressure from interest rates and the US bond market.
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Source: www.vietnam.vn