Bitcoin: Is the bull market back?
Bitcoin stayed above $86,000 on Tuesday after weeks of strong gains fueled by renewed appetite for risk. Some see this as the end of the "crypto winter," but short selling and currency uncertainty still call for caution.
A huge Bitcoin coin sits at the center of the image on a cracked financial platform. On the left, a giant black bear keeps one claw on the coin, baring its teeth and refusing to let go. On the right, a massive bull bursts through a cloud of orange dust and charges at the bear, head lowered and horns forward. Bitcoin rests between them and begins to rise under the bull's push. In the foreground, several traders watch with expressions of surprise, fear, and excitement.
In brief
Bitcoin remains above $86,000 after several strong sessions. Four factors support the recovery: stronger technical momentum, renewed ETF demand, growth in the crypto market, and a greater appetite for risk.
Short liquidations helped push prices higher, adding force to the near-term move. Altcoins have also gained from a friendlier regulatory climate, even after the CLARITY Act failed in the Senate.
US monetary policy remains the main risk, with rising interest rates and uncertainty over inflation.
Four signs support Bitcoin's recovery
Bitcoin rose more than 5% last Friday and nearly 6% on Monday, then held on to most of those gains. Its price topped $86,000, a level it had not reached since late January.
Sean Farrell, Fundstrat's head of digital assets, says the break higher is strong enough to signal a shift in the cycle. He said:
"I think the crypto winter is over, although the rise will not necessarily be linear."
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Several factors now support the bullish view:
Bitcoin moved above its 50-day moving average, a measure of the medium-term trend. The price reached $86,000 after spending much of the year below $80,000. Demand for spot Bitcoin ETFs has returned after several periods of outflows. The crypto market's total value reached $2.94 trillion on Monday.
That total remains almost 30% below the October 2025 record. Bitcoin is also well below its all-time high of more than $125,000. The rebound has recovered part of the bear market decline, but prices have not returned to their previous peaks.
ETFs and liquidations fuel the rise
Nicolai Sondergaard, an analyst at Nansen, says the recovery mainly reflects renewed ETF demand and a sharp short squeeze. This happens when traders who bet on falling prices must quickly buy Bitcoin to close their positions.
Those forced purchases add demand and can speed up a rally. Bitcoin's break through several resistance levels triggered a wave of liquidations among short sellers. That helps explain the move's pace, but it does not mean the rally will continue at the same rate.
The gains have broad support. Altcoins also rose after the Securities and Exchange Commission granted a five-year exemption to certain tokenized stock trading activities. The decision lifted hopes for blockchain projects, especially Ethereum and Solana.
The market also held up after the Senate rejected the CLARITY Act, a bill intended to set federal rules for crypto. Its failure could have caused a drop, but investors still appear to expect regulators to set clearer standards.
Monetary policy remains the main risk
Bitcoin had already climbed nearly 25% in August after several US Treasury actions in the bond market and efforts to support the yen. Wall Street viewed those steps as an attempt to limit rising yields, which helped risky assets.
A recent drop in oil prices has also improved market sentiment. Lower oil costs ease inflation concerns and slow the rise in bond yields. Bitcoin has benefited from the same renewed appetite for risk as technology stocks.
The Federal Reserve has just raised interest rates, and markets priced in a 56% chance of another increase before year-end. If inflation picks up again or yields rise, demand for crypto could weaken.
Bitcoin's move above its 50-day moving average points to technical improvement, but macroeconomic risks remain. To confirm a lasting end to the crypto winter, Bitcoin must stay above $80,000, draw steady ETF inflows, and rise without relying only on short liquidations.