Bitcoin climbed toward $80,000 over the past two days as improving liquidity conditions and a rebound in ETF demand could mark a broader shift in market momentum, according to analysts at Bernstein. The move follows a U.S. Treasury decision to expand debt buybacks, while spot bitcoin ETFs posted their strongest inflows in months and Strategy's bitcoin position moved back into profit.
Bitcoin rose as high as $79,500 on Friday before pulling back to around $78,000, extending a rally that Bernstein analysts linked to the U.S. Treasury's intervention in longer-dated government bonds. The Treasury said it would at least double the size of its liquidity-support buybacks to $4 billion per operation by Sept. 9 after a surge in long-term yields.
Bernstein analysts, led by Gautam Chhugani, said bitcoin has historically reacted positively to expanding liquidity conditions. They argued the crypto market's weakness this year partly reflected tighter financial conditions following the Iran conflict and a shift of investor capital into AI and semiconductor trades. As AI spending increasingly taps debt markets, however, Bernstein said additional liquidity could flow into bitcoin and other hard assets as a hedge.
Spot bitcoin ETF flows rebound
Outflows from spot bitcoin ETFs peaked at roughly $7 billion across May and June, about 10% of assets under management, Bernstein said. But the funds attracted $1.6 billion in net inflows this week, including $606.3 million on Thursday. That pushed combined assets above $85 billion, up from around $70 billion in June, and BlackRock led Thursday's flows, adding $503 million to its IBIT fund.
Strategy's balance sheet has also stabilized. The company sold only about 0.8% of its bitcoin holdings in recent weeks to bolster dividend cash reserves and support buybacks of its STRC preferred stock. Bernstein said Strategy's cash reserves now cover 2.8 years of dividends and expects the firm to resume bitcoin purchases as STRC moves back toward its $100 nominal value.
Strategy holds 840,447 BTC bought at an average price of $75,385. That puts the position back in the black with an unrealized profit of over $2 billion as bitcoin trades near $78,000.
Regulation and ether's outperformance
Bernstein also pointed to regulatory developments as a potential source of support. The analysts said greater certainty is likely with or without passage of the Clarity Act, which faces a Sept. 15 procedural vote. They also expect accelerated SEC and CFTC rulemaking around native crypto issuance, tokenized equities, perpetual futures, compute derivatives and prediction markets regardless of the bill's outcome.
Ether has outperformed bitcoin during the latest rebound. Bernstein attributed the move to ether's greater exposure to stablecoins, tokenization and real-world asset adoption.
Source: The Block
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