To The Moon

Bitcoin extended its upward trajectory on Tuesday, as renewed inflows into spot Bitcoin ETFs and an improving risk appetite sustained the cryptocurrency's recent rebound.

The flagship digital asset was last up less than 1% at $79,287.12, having traded as high as $81,240.68 earlier in the session.

This latest advance builds on the powerful rally that began last week, when Bitcoin surged more than 20% in three days, marking its strongest three-day gain since 2023. The move was partly fueled by a short squeeze, with over $4 billion in bearish crypto positions liquidated as prices climbed.

The surge comes on the heels of the U.S. Treasury's announcement that it would double its purchases of long-dated government bonds. That move briefly pushed yields lower, reviving demand for risk assets, while concerns over inflation and government debt also bolstered interest in assets viewed as scarce.

Institutional demand has also made a comeback. U.S. spot Bitcoin exchange-traded funds (ETFs) attracted net inflows of $1.92 billion last week, the largest weekly intake since October, when Bitcoin reached its previous cycle peak.

ETF Inflows Provide Fresh Support

Questions remain over whether this breakout can be sustained. Bitcoin had been in a prolonged slump since October, and BTIG noted that a similar advance in January 2023 initially faded before the cryptocurrency found support near its 200-day moving average.

Fundstrat said in a Monday report that the buying following last week's short squeeze suggests Bitcoin's rally could be "more durable than a tactical bounce." The firm pointed to robust inflows into Bitcoin and Ethereum ETFs, rising trading volumes, and the creation of more stablecoins, which investors typically use to purchase cryptocurrencies.

The research house also highlighted that activity in the options market signals growing investor conviction in the rally's staying power. Unlike previous rebounds, when traders primarily bet on short-term price gains, investors are now paying a premium for exposure to longer-dated Bitcoin upside.

Fundstrat further noted that Bitcoin's advance has occurred without fresh purchases from Strategy, the world's largest corporate cryptocurrency holder. Strategy has not bought Bitcoin for two weeks. If the company resumes buying while ETF demand remains strong, it could provide additional support for prices.