Bitcoin trades above $78k, bulls eye $80k as liquidity and ETF demand fuel rally

Bitcoin BTC trades above $78,600 on Monday, rising approximately 2% over the previous 24 hours and extending last week’s 20% rally.

The weekly rally was Bitcoin’s strongest performance in more than two years and pushed the cryptocurrency to an intraday high near $79,460.

Improving liquidity expectations, stronger institutional demand, a more favorable regulatory outlook and widespread short covering supported the move.

Bitcoin is now approaching the psychological resistance at $80,000. Several economic and policy events this week could determine whether buyers can extend the rally or whether the market enters a consolidation phase.

Treasury purchases improve liquidity expectations

Bitcoin’s rally over the past few days came after US Treasury Secretary Scott Bessent announced that the Treasury would increase purchases of longer-dated government debt.

The announcement helped lower long-term bond yields and improved investors’ appetite for risk assets. It also raised expectations that financial conditions could become more supportive.

Meanwhile, US government debt passing $40 trillion renewed concerns about the country’s fiscal outlook.

These concerns revived interest in the so-called currency debasement trade, which favors scarce assets such as Bitcoin and gold as potential stores of value.

The regulatory backdrop also improved after President Donald Trump renewed his push for clearer digital asset rules.

Greater regulatory clarity could reduce the perceived risk of investing in cryptocurrencies and make it easier for traditional financial institutions to increase their exposure.

Institutional demand was evident in exchange-traded fund flows. US spot Bitcoin ETFs recorded $1.92 billion in net inflows last week, their strongest weekly total since early October.

The combination of ETF demand and short covering amplified Bitcoin’s upward move as traders betting on lower prices were forced to close their positions.

Core PCE inflation could shape Bitcoin’s next move

US core Personal Consumption Expenditures inflation data, scheduled for Wednesday, represents one of Bitcoin’s main macroeconomic tests this week.

Core PCE is the Federal Reserve’s preferred inflation measure. Economists expect its annual rate to remain at 3.3%.

Markets currently assign a 65% probability that the Fed will keep interest rates unchanged in September.

A cooler-than-expected inflation reading could lower bond yields and weaken the US dollar, creating a supportive environment for Bitcoin.

A stronger inflation report could produce the opposite reaction by encouraging expectations that interest rates will remain higher for longer.

In addition to that, Federal Reserve Chair Kevin Warsh’s speech at Jackson Hole on Friday could become the week’s most significant market catalyst.

Warsh has provided limited guidance on monetary policy since taking office in May, leaving investors uncertain about the Fed’s next move.

Even a modest change in his language on inflation, interest rates, or economic growth could affect Treasury yields, the dollar, and risk assets.

A cautious policy message could sustain expectations of easier liquidity conditions and help Bitcoin challenge $80,000.

A hawkish message could drive yields and the dollar higher, putting pressure on the cryptocurrency’s recent gains.

Bitcoin consolidates below $80,000

The BTC/USD 4-hour chart remains bullish and efficient after Bitcoin broke above its 50-day Exponential Moving Average and a falling trendline before clearing the 200-day EMA.

Last week’s rally saw Bitcoin hit $79,460 before the price eased back and began consolidating above $77,000.

The Relative Strength Index remains in overbought territory, showing that bullish momentum is strong but stretched.

The elevated reading could keep Bitcoin in consolidation or trigger a mild pullback before buyers make another attempt at $80,000.

The psychological $80,000 level is Bitcoin’s immediate upside target. A clear break above that barrier would place the previous high near $82,800 in focus.

Clearing $82,800 would confirm a stronger technical breakout and could open the path toward $90,000.

Continued ETF inflows, softer inflation data, and a restrained message from the Federal Reserve would support this bullish scenario.

If Bitcoin extends its pullback, initial support sits near $73,400, corresponding with the 61.8% Fibonacci retracement level.

The 200-day EMA near $71,600 provides the next major technical support, followed by the psychological $70,000 level.

A more pronounced correction could expose the $67,000 region, where the 50-day EMA, July high, and 38.2% Fibonacci retracement converge.

A decisive break below $67,000 would weaken the bullish structure and shift attention toward the mid-August low near $63,000.

For now, Bitcoin’s short-term bias remains positive while the price holds above $71,600, but overbought conditions leave the rally vulnerable to profit-taking.