Bitcoin and Ethereum soared by more than 20%-is the cryptocurrency bear market over?

Bitcoin exceeded US$80,000, analysts believe the turning point of the bull market cycle has reached

Bitcoin (BTC) recently suddenly exceeded a 20% gain and its price soared to US$79,500, which convinced analysts that the market landscape is changing and the bull market may have restarted. At the same time, Ethereum (ETH) and Hyperliquid (HYPE) also increased by more than 25%. Data shows that the current rise is not an isolated random event.

The cryptocurrency market is at a turning point

When analyzing the importance of recent cryptocurrency market trends, Helios Analytics founder Jamie Coutts said: "If you adjust for volatility (Bitcoin has been in a structural downward trend in volatility), this week's two-day increase is the fifth largest volatility since 2018 (equivalent to 4.4 standard deviations). This doesn't look like a normal bucking rally. Market lows in 2018 and 2019 were accompanied by a volatility squeeze, followed by a large pulsed rise. Both times were impressive in percentage terms, but neither was as good as this time in terms of volatility adjusted."

Coutts explained that the "magnitude of the increase" may mark a paradigm shift in the cryptocurrency market. "So this is a cyclical turning point rather than a rebound, and subsequent statistics support this view. After a sharp rise like this, the probability of Bitcoin rising in 30 days, 90 days, and 180 days is more than 70%, compared with about 50% in random sample studies."

The surge in U.S. Treasury yields and policy shifts suggest

Bitcoin's surge comes after the 30-year U.S. Treasury yield hit a 19-year high of 5.33%. Subsequently, U.S. Treasury Secretary Scott Bessent announced that the Treasury would step in and double the repurchase of long-term debt. The news of the expanded repurchase briefly depressed long-term Treasury yields and triggered a market comparison to the yield curve control (YCC). This confirms the signal many cryptocurrency, commodities and precious metals traders have been waiting for-that the Federal Reserve's money printing press may be restarting again.

Brian Russ, founder of 1971 Capital, believes that this repurchase can be regarded as a form of YCC. He said: "The signal itself is important. They will limit yields. In simple terms: the government is buying back its own debt." Russ added,"The signal that Basent sends is the key. The Treasury will limit yields. The first is by increasing repurchase, and the second is by adjusting SLR (Supplementary Leverage Ratio) in the future to allow banks to buy and hold more treasury bonds. This is yield curve control, which is good for Bitcoin and gold. My view is that the bottom of Bitcoin has emerged and the curtain on a new bull market has begun."

Regarding the possible future paths for markets and investors, Hyblock CEO Shubh Varma said: "Investors will eventually realize that the United States will continue to print money and these liquidity injections are eroding the purchasing power of the dollar. So the answer is simple. Don't hold U.S. dollars. Buy stocks, or any asset that is pegged to the dollar and has long-term growth prospects. Investors will choose to protect themselves from the weakening of the dollar."

Regulators accelerate progress on cryptocurrency regulatory framework

At the same time, the U.S. Securities and Exchange Commission (SEC), the White House, and the Commodity Futures Trading Commission (CFTC) are also moving forward on cryptocurrency regulation. At the White House, President Trump urged lawmakers to pass the CLARITY Act and stressed that the United States will not slow down its pace of becoming the central hub of the cryptocurrency industry. SEC Chairman Paul Atkins and CFTC Chairman Michael Selig both said that if the CLARITY Act fails to make progress in the Senate, their agencies will continue to move forward with cryptocurrency rules.

Cody Carbonet, CEO of the Digital Chamber of Commerce, said: "It is very clear from the president's comments and discussions that the U.S. government will not wait for legislation. The White House has authorized the SEC and CFTC to act quickly." Brian Armstrong, CEO of Coinbase, predicts that by 2030, Bitcoin could be traded in the range of $300,000 to $400,000.

Overall, even if the CLARITY Act fails to pass the Senate, the SEC, CFTC and the White House are fulfilling their stated goals of advancing cryptocurrency regulation.

The influx of ETF funds and large-scale liquidation of futures contracts

More than US$4 billion of positions were cleared in the cryptocurrency market, which was classified by the Kobeissi Letter as the "seventh largest liquidation event in history." Meanwhile, single-day trading volume of BlackRock's IBIT spot bitcoin ETF soared to more than $4.4 billion, setting a seven-month high.

Bitcoin rose to US$79,500, returning 840,447 Bitcoin positions held by Strategy to profitability, achieving unrealized gains of US$1.4 billion. The company's share price also rose, closing closer to its par value of $100 per share. With Strategy's average cost base at $75,385, its return to profit may eliminate the tail risk of a forced sell-off, but the coming weeks will reveal whether changes in market conditions will translate into new Bitcoin purchases.

For the first time in weeks, there has been synergy between the flows of retail and institutional investors. Amid the rise, driven in part by short liquidations, ETF inflows accelerated. This synergy has driven double-digit gains in BTC and ETH. But with most of the bearish power depleted, the continuation of the rally will depend on continued demand in the spot CEX and ETF markets.

Growth in institutional adoption and digital asset reserves are also supporting buying in the cryptocurrency market, and this trend existed long before last week's breakthrough rally. Multiple 13F filings show that various institutional investors are increasing their IBIT positions, while Metaplanet, Gemini and Strive (SATA) are also adding bitcoin to their reserves.

Data released by global investment management firm VanEck showed that 8 of the 12 Bitcoin surrender signals were triggered, indicating that Bitcoin may have hit bottom, and record low volatility signals upcoming directional swings.

According to Fairlead Strategies founder Katie Stockton, Bitcoin broke its 200-day moving average, marking an "important positive development in the long term." She said: "The momentum is strong and close to the $83,000 -84,000 resistance level. Breaking through the area would confirm a major bullish reversal."

Market Follow-up Focus

The synergy of buying forces from institutional and retail investors catalyzed last week's gains. Can each group provide the necessary daily trading volume to maintain the current bullish momentum? Daily cumulative spot and futures trading volume Delta data and ETF capital flow are indicators that need attention.

Coinbase CEO Brian Armstrong said he expects the CLARITY Act to be passed by the Senate by 60 votes on September 15. Has the "smart money" in the cryptocurrency market been laid out in advance for successful voting? How will this be reflected across different markets?

Bitcoin's gain of more than 25%, setting its best weekly performance since March 2023 and its fifth-largest two-day gain after volatilities adjustment since 2018. Can $70,000 become a new support level in the coming weeks?

The Jackson Hole Economic Policy Seminar is scheduled to be held from August 27 to 29. Given Treasury Secretary Basent's recent comments on bond purchases, market reactions, Iran issues and the shadow of inflation, discussions at the seminar will provide a lot of food for thought.