According to Bloomberg, Bitcoin rose as much as 7.7% to $87,354 in New York, extending its rebound by more than $10,000 from last week’s lows. The cryptocurrency was trading around levels last seen in late January, although it remained about a third below its record high reached in October.
The rally came alongside gains in global stocks and bonds, as lower oil prices and optimism around a planned summit between US President Donald Trump and Chinese President Xi Jinping improved broader market sentiment. Smaller cryptocurrencies also advanced, with Dogecoin rising as much as 14% and XRP gaining about 8%, Bloomberg reported.
Crypto markets also saw heavy position liquidations during the rally.
Bloomberg, citing CoinGlass data, reported that liquidations of long and short positions across digital assets had climbed to about $1 billion over 24 hours, the highest level since late August.
Short positions accounted for about $878 million of the liquidations during that period.
Prateek Gupta, head of business at Mudrex, said the rally was supported by a more favourable risk environment after the Federal Reserve’s tone was seen as relatively dovish, while falling oil prices helped ease concerns over inflation. He also pointed to short covering as an additional driver.
Bitcoin is now up about 44% this quarter, according to Mudrex, which said this would mark its strongest quarterly gain since the fourth quarter of 2024. The firm also noted that Strategy had added another 950 Bitcoin, taking its holdings to 846,000 Bitcoin.
ETF flows have provided another source of support.
Vikram Subburaj, CEO of Giottus, said US spot Bitcoin ETFs recorded inflows of $433 million on September 18 and $617.6 million on September 21, following heavy outflows earlier in the week.
CoinSwitch’s Markets Desk said Bitcoin’s move above $87,000 followed a break above the $82,000 level, while roughly $750 million in short positions were liquidated. It also pointed to a rise of around $2 billion in futures open interest, indicating that leverage had increased alongside the price rally.
However, the increase in leverage means the durability of the rally will depend on whether spot demand continues to support prices. CoinSwitch said stronger underlying buying would be important as elevated positioning could also increase the risk of sharper pullbacks.
Nischal Shetty, founder of WazirX, said the move above $86,000 marked an improvement in market sentiment after months of pressure. He pointed to the recovery above $80,000, continued regulatory activity by US agencies and softer oil prices and Treasury yields as factors supporting the rebound.
Shetty also highlighted renewed institutional activity. US spot Bitcoin ETFs recorded around $617.6 million in daily net inflows, equivalent to roughly 7,610 Bitcoin, while aggregate ETF trading volume stood at about $5.72 billion, according to his data. US spot Ethereum ETFs also recorded net inflows of around 55,640 ETH.
Harish G Vatnani, head of trade at ZebPay, said Bitcoin’s recovery followed a period of uncertainty around the setback for the CLARITY Act and the Federal Reserve’s rate decision. He said the market initially reacted negatively but stabilised once the uncertainty around the two events passed.
“Renewed spot Bitcoin ETF inflows, short covering, and improving broader risk sentiment have further supported the move,” Vatnani said.
The rally has also extended to altcoins.
Minal Thukral, executive vice president and growth and crypto business head at CoinDCX, said Bitcoin had moved from around $82,000 to above $85,000 within a few hours, with the move initially supported by US spot Bitcoin ETF inflows and improving sentiment in oil and equity markets.
Thukral said the rally subsequently moved into a crowded short zone, with more than $300 million worth of short positions liquidated in one hour, forcing traders to buy Bitcoin back as prices rose. She also noted gains of more than 20% in SUI and NEAR, while RENDER and AVAX rose around 17% to 18%.
Despite the sharp recovery, analysts cautioned that the move needs to be assessed against the broader macro backdrop. Bloomberg reported that traders remained concerned about crude oil prices and elevated US Treasury yields, while the outlook for Federal Reserve policy could continue to influence risk assets.
For investors, Subburaj said the $82,000-$82,800 area would be an important support zone to watch after the breakout. Thukral said investors looking to build long-term exposure could consider spreading purchases over multiple transactions, while active traders should pay close attention to position size, collateral and liquidation levels following the sharp intraday move.