Bitcoin retreats from eight-month high after dizzying 13% rally

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Bitcoin eased to around US$85,500, still up about US$10,000 from last week’s lows after joining a broad rebound in risk assets. (EPA Images pic)

HONG KONG: Bitcoin retreated from an eight-month high Tuesday in Asia after a dizzying rally that saw it surge more than 13% in four days.

The original cryptocurrency eased to around US$85,500 in early Singapore trading from as high as $87,381 in the US session, still up around US$10,000 from last week’s lows after crypto joined a broad rebound in risk assets including stocks. Bitcoin is back at late-January levels but remains well below its record of US$126,000 set in October.

“The rapid move back through US$80,000 has traders believing the bear phase is over; momentum is bringing sidelined capital back in, so the path of least resistance is higher,” said Rich Rosenblum, co-founder of crypto market maker GSR. “The risk is that this is a macro liquidity trade wearing a crypto costume. If so, a risk-assets wobble would put Bitcoin under significant pressure.”

Digital assets have brushed off last week’s failure of landmark US legislation that would have established clearer industry regulation and the Federal Reserve’s first interest-rate increase in more than three years. A green light on Thursday from the Securities and Exchange Commission for blockchain-based versions of securities to start trading in the US brightened the mood, sending related tokens soaring.

Falling oil prices and optimism ahead of a summit between US president Donald Trump and China’s Xi Jinping have buoyed markets more broadly.

Liquidations of long and short positions across digital assets have climbed to more than US$1 billion over the last 24 hours, with short bets accounting for about US$840 million of that, according to data compiled by Coinglass.

“It looks like mechanics before conviction. Bitcoin cleared the top of its September range into a dense band of short liquidation levels, and forced buying did the rest,” said Rachael Lucas, an analyst at BTC Markets. “US$84,000 is the level that matters. It was the breakout, and it should now hold as the floor if this is a regime change rather than a short squeeze.”

Bitcoin open interest on the options trading platform Deribit was heavily dominated by calls, signalling bullish sentiment. The platform showed nearly 320,000 contracts for the right to buy the token compared with over 169,000 for puts, or the right to sell.

Other positives lifting sentiment around Bitcoin are big inflows into spot US exchange-traded funds at the end of last week and Michael Saylor’s Strategy - the largest corporate holder of Bitcoin - purchasing the token for the first time in three weeks.

Still, headwinds remain, with crude oil at around US$100 a barrel and US Treasury yields elevated, though falling.

Bitcoin is still off its 2026 high of over US$97,000 in mid-January, and retail enthusiasm has proven hard to rekindle as artificial intelligence stocks and other AI-linked trades compete for the same pool of speculative capital.

“For most of this year crypto was the forgotten macro trade, it lagged equities and gold while capital and attention moved to AI,” said Rosenblum. “What’s changed is positioning, not fundamentals: Bitcoin was under-owned and leaning short.”

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