Bitcoin surged above $87,000 on Monday as a broad recovery in global risk assets helped revive demand for cryptocurrencies, with positive flows into US spot bitcoin exchange-traded funds adding to the improved sentiment, according to a report by Bloomberg.
The largest cryptocurrency climbed as much as 7.7% to $87,354, extending a rebound of more than $10,000 from last week’s lows. The move took bitcoin back towards levels last seen in January, although it remained around one-third below its record high reached in October.
The rally was part of a wider risk-on move across financial markets, with stocks and bonds advancing as oil prices eased and investors looked ahead to a meeting between US President Donald Trump and Chinese President Xi Jinping. Smaller digital assets outperformed bitcoin in some cases, with Dogecoin rising as much as 14% and XRP gaining about 8%.
The renewed buying has also triggered a sharp increase in derivatives liquidations. Around $1bn of long and short cryptocurrency positions were wiped out over the previous 24 hours, according to CoinGlass data, marking the highest level since late August. Short sellers accounted for about $878m of the liquidations as bitcoin’s rally forced bearish positions to unwind.
Bitcoin’s recovery follows a difficult period for crypto markets that included the failure of the Clarity Act, which had been intended to provide greater regulatory clarity for the digital-asset industry, as well as the Federal Reserve’s first interest-rate increase in more than three years.
Sentiment subsequently improved after the US Securities and Exchange Commission gave the green light for digital versions of securities to begin trading in the US.
The overall cryptocurrency market has recovered alongside bitcoin. Total crypto market capitalisation reached about $2.8tn, its highest level since the end of January, according to Alex Kuptsikevich, chief market analyst at FxPro.
Crypto-linked equities also benefited from the rally. Coinbase gained 3.5%, Circle Internet Group rose 3% and Strategy, which holds Bitcoin on its balance sheet, climbed 9.5%.
Options positioning points to a further improvement in investor sentiment. On Deribit, bitcoin call open interest significantly exceeded puts, with more than 272,000 contracts giving holders the right to buy Bitcoin compared with more than 154,000 put contracts.
The shift in derivatives positioning could be relevant for crypto-focused hedge funds, which have been navigating substantial swings in both spot prices and volatility. The latest rally has created gains for bullish positioning, while the liquidation of short positions highlights the potential for rapid moves when positioning becomes crowded.
