Bitcoin Bounces Back Above $82,000 After $80,000 Scare; What’s Driving The Crypto Recovery?

Bitcoin climbed back above $82,000 on Monday, October 19, extending its recovery after the world's largest cryptocurrency briefly slipped below the $80,000 mark last week.

Bitcoin was up 1.4% at $82,067.66 in Asian trade, while Ether gained 3% to $2,420.22. The recovery comes after Bitcoin touched a four-week low of around $79,770 last Thursday as hotter US inflation data, stronger retail sales and rising Treasury yields pushed investors away from riskier assets.

The mood has improved at the start of the week as some of those pressures ease. Brent crude fell 1.7% to around $108 a barrel on Monday after the US moved towards easing some sanctions on Russia, while US government bonds strengthened. The 10-year Treasury yield slipped about four basis points to 5.05% after recording its biggest weekly decline in more than eight months.

That has given Bitcoin some room to recover, although the cryptocurrency is still below the levels seen before last week's sell-off.

Why Is Bitcoin Rising?

Bitcoin's latest recovery comes after a volatile week in which inflation, interest-rate expectations and weakness in technology stocks hit cryptocurrencies.

US inflation and retail sales data released last week had raised concerns that the Federal Reserve could keep monetary policy tighter for longer. Bitcoin subsequently fell below $80,000, with the decline also triggering heavy liquidations across leveraged crypto positions.

US Treasury yields have moved lower from last week's highs, while the fall in crude oil prices has reduced some of the immediate inflation concerns facing global markets.

Oil prices dropped on Monday after US President Donald Trump waived some sanctions and tariffs on Russia that could allow additional Russian fuel supplies into the market. Brent crude was down 1.7% at $108.02 a barrel in Asian trade. Bitcoin and Ether moved higher alongside the shift in sentiment.

Bitcoin Recovers From Four-Week Low

The recovery follows a sharp move below the psychologically important $80,000 level last week. Bitcoin fell as low as about $79,770 on Thursday, its weakest level in four weeks, before recovering above $82,000. The cryptocurrency had come under pressure after stronger-than-expected US retail sales and wholesale inflation data added to expectations that interest rates could remain elevated.

The sell-off also came alongside weakness in global technology shares as concerns over the huge investment required to fund artificial-intelligence infrastructure weighed on risk appetite.

Bitcoin has since recovered more than $2,000 from Thursday's low, but the move has not completely removed the risks hanging over the crypto market. Investors are now looking towards the Federal Reserve's October 28 meeting for the next major cue.

Fed funds futures currently imply an 84% probability that the US central bank will leave rates unchanged at the meeting, according to CME FedWatch data cited by Reuters.

The direction of US Treasury yields, crude oil and expectations around the Fed could therefore remain important for Bitcoin after its latest move back above $82,000.

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