Bitcoin pulled back from an eight-month peak during Tuesday's Asian trading session, following a rapid climb that delivered a gain of more than 13% over a four-day stretch.
The digital asset eased to around $85,500 after touching a high of $87,381 during U.S. trading hours, still marking a rebound of roughly $10,000 from last week's low point. The cryptocurrency had joined a broad rally across risk assets such as equities. At current levels, Bitcoin has recovered to where it stood at the end of January, yet remains well below the record high of $126,000 reached last October.
"Getting back above $80,000 so quickly has convinced traders that the bear phase is over; momentum is drawing sidelined capital back in, so the path of least resistance points higher," said Rich Rosenblum, co-founder of crypto market maker GSR. "The risk is that this could be a macro-liquidity trade dressed up in crypto clothing. If that's the case, any volatility in risk assets will put enormous pressure on Bitcoin."
Support and headwinds collide, $84,000 becomes the key trigger
The digital asset showed resilience through two major events last week: a landmark U.S. bill aimed at establishing a clearer industry regulatory framework failed to pass, and the Federal Reserve delivered its first interest rate hike in more than three years. Last Thursday, the U.S. Securities and Exchange Commission (SEC) approved blockchain-based tokenized stocks for trading in the United States, lifting market sentiment and sending related tokens sharply higher. Falling oil prices and optimism ahead of a U.S.-China summit also boosted overall markets.
Data compiled by Coinglass shows that liquidations across long and short digital asset positions have exceeded $1 billion in the past 24 hours, with short positions accounting for roughly $840 million.
"It looks like mechanics are ahead of conviction. Bitcoin broke through the September range top into a dense zone of short liquidations, and forced buying fueled the subsequent rally," said Rachael Lucas, analyst at BTC Markets. "$84,000 is the critical level. That's the breakout point, and if this move is a shift in market structure rather than a short squeeze, it should now become the floor."
On options trading platform Deribit, open interest in Bitcoin is dominated by call options, pointing to strong bullish sentiment. The platform shows nearly 320,000 contracts giving the right to buy Bitcoin, versus more than 169,000 contracts to sell, known as put options.
Additional tailwinds for Bitcoin include significant inflows into U.S. spot ETFs over the weekend, as well as Strategy (MSTR.US), the largest corporate holder of Bitcoin, resuming purchases for the first time in three weeks.
However, headwinds have yet to fade: crude oil prices are hovering near $100 per barrel, and U.S. Treasury yields, while off their highs, remain elevated. Meanwhile, Bitcoin still trades below the $97,000 peak touched in mid-January 2026, and retail enthusiasm has been hard to reignite as AI stocks and other AI-related trades compete for the same pool of speculative capital.
"For most of this year, crypto was the forgotten macro trade, lagging equities and gold while capital and attention shifted toward the AI trade," Rosenblum said. "What changed is positioning, not fundamentals: Bitcoin was underweight and heavily tilted toward shorts."