Cryptocurrencies
Cryptocurrencies have recently been on the rise again. Several factors are driving this upward trend. (Stock photo)
Keystone
After a prolonged summer lull, Bitcoin has made a strong comeback with a sharp rally. The “leading cryptocurrency” briefly rose above the $80,000 mark, reaching its highest level since mid-May.
Today at 11:20On Wednesday morning, Bitcoin was trading at $79,032. This represents a 23 percent increase for the week. According to market observers, this is the strongest weekly gain in more than three years.
Multiple drivers
The U.S. Treasury Department’s announcement that it would expand its repurchases of longer-term government bonds is considered a major catalyst for the price increase. As a result, yields on long-term U.S. Treasuries fell, while the dollar came under pressure. Such an environment is considered favorable for scarce assets like Bitcoin.
U.S. policy provided additional momentum. During a meeting with representatives of the crypto industry, President Donald Trump reaffirmed his commitment to making the U.S. the leading hub for digital assets. He also suggested that the U.S. could hold “substantial” Bitcoin reserves in the future.
Ultimately, the rally was fueled by massive short covering—that is, failed bets on falling prices. According to CoinGlass, liquidated positions totaled more than $4 billion within a week. At the same time, sustained inflows into U.S. spot Bitcoin ETFs fueled the momentum.
Skepticism Persists
However, according to a commentary by DZ Bank, it remains to be seen whether this will lead to a sustained new bull market. For example, in the U.S., the “Clarity Act”—which is intended to establish clear rules and responsibilities—has yet to go through the legislative process. Other announced measures have also not yet been implemented.
In addition, market observers suggest that the wave of short liquidations was likely more of a one-time catalyst. At the same time, significant leveraged long positions have been rebuilt in the wake of the rally, which could amplify any potential pullback. Consequently, the range of forecasts for the rest of the year remains wide.
Altcoins are following suit
Meanwhile, the improved sentiment swept across nearly the entire crypto market. Ethereum rose by nearly 30 percent over the week to $2,463, outperforming Bitcoin slightly. Among the smaller players, Zcash—up 57 percent—as well as Hyperliquid and XRP—each up about 40 percent—were among the biggest gainers.
The total value of all 18,700 cryptocurrencies tracked on CoinGecko stood at around 2.75 trillion dollars on Wednesday, an increase of about 500 billion dollars from the previous week. Bitcoin’s dominance rose by about one percentage point to 58 percent.