Bitcoin’s 24% Rally Could Face Resistance at $70K as Yields Increase, According to Analysts

Bitcoin’s remarkable weekly surge, the strongest since March 2023, brought the price close to $80,000. However, experts indicate that additional increases may be reliant on decreasing US bond yields, sustained demand for spot ETFs, and advancements on the CLARITY Act.

Can Bitcoin maintain its position near $80,000 following its most substantial rally since 2023?

On August 24, Bitcoin (BTC) traded near $79,800 after a climb from below $64,000 on August 19, reaching around $79,550, marking its highest level since May.

According to Gadi Chait, investment manager at Xapo Bank, the gain represented about 24% for the week, making it Bitcoin’s strongest weekly growth since March 2023.

The movement was influenced by US policy changes. On August 19, the US Treasury declared it would at least double the maximum size of its liquidity-support buybacks for Treasury securities with maturities of 10 to 30 years.

The buybacks will increase from a maximum of $2 billion to at least $4 billion each, starting September 9. The market viewed this decision as an initiative to enhance liquidity in long-dated government debt after yields had pressured risk assets.

Bitcoin also gained from revitalized expectations for more transparent US crypto regulations, especially after President Donald Trump urged lawmakers to push forward the CLARITY Act. This proposed legislation is still pending in the Senate, where its progression could act as another catalyst for the market.

ETF inflows bolstered the Bitcoin rally

Chait emphasized that the origins of the demand behind the rally were just as significant as the magnitude of the price increase.

“An estimated $1.9 billion flowed into US spot Bitcoin ETFs, showcasing genuine investor interest, while record short liquidations fueled the momentum.”

US spot Bitcoin ETFs experienced five days of consecutive inflows by the week ending August 21. The total of about $1.9 billion signified a notable return of institutional interest after funds struggled to draw consistent investment earlier this year.

The inflows indicated that the rally’s support was not solely derived from forced buying in derivatives markets. Traders with leveraged short positions were liquidated as Bitcoin surpassed resistance levels, generating additional market orders that sped up the rise.

Justin d’Anethan, head of research at Arctic Digital, noted that shifting expectations around US interest rates brought investors back to an asset that had lagged for several months.

“With pent-up demand and a prolonged period of underperformance for Bitcoin, the situation became favorable for investors, prompting both algorithms and sophisticated trading firms to re-enter the market.”

He pointed out that leveraged traders found themselves on the wrong side of the breakout, leading to what he described as the largest single-day short liquidation event. Profit-taking and selling from investors who had been waiting to exit could now result in a short-term pullback as the market adjusts to the move.

Increasing bond yields challenge the Treasury narrative

Jeff Mei, chief operating officer of the crypto exchange BTSE, mentioned that enthusiasm regarding the Treasury buybacks had diminished as bond yields started to rise again.

“The size of these buyback operations is relatively small compared to the overall Treasuries market, which exceeds $30 trillion.”

Treasury buybacks aim to support market liquidity by replacing older, less actively traded securities with newly issued debt. They do not equate to quantitative easing, as the Treasury must finance its operations, unlike the Federal Reserve’s asset purchases, which generate central bank reserves.

Mei emphasized the need for the market to observe whether the Treasury would expand the buyback program beyond the initial $4 billion maximum for each operation. Without such an increase, the program’s impact on the larger bond market might remain limited.

D’Anethan argued that rates were the main catalyst for the rally, stating that ETF flows, regulatory developments, and large investor activities had not significantly influenced Bitcoin until expectations regarding Treasury policy shifted.

Chait suggested that this macro shift bolstered Bitcoin’s case for the long term as US government debt continues to rise.

“As rising debt raises concerns about potential currency debasement, Bitcoin’s fixed supply and independence from any government or central bank become increasingly relevant.”

Bitcoin could approach $90,000 if US catalysts persist

Mei indicated that Bitcoin could find itself in a range between $80,000 and $90,000 if the Treasury amplifies its buybacks and the CLARITY Act makes significant progress by mid-September. He added that a Federal Reserve rate cut or another form of monetary support could further boost prices.

This scenario remains contingent, however, as rising yields enhance the relative attractiveness of government debt while increasing borrowing costs throughout the financial system. The absence of new policy support or weakening ETF demand could leave Bitcoin exposed after its rapid increase.

“Without the addition of further positive catalysts and sustained investor confidence, there’s a possibility that Bitcoin could relinquish recent gains and drop back down to $70,000,” Mei stated.

The CLARITY Act represents another potential short-term US catalyst, although its eventual approval is uncertain. Investors will be keenly observing whether lawmakers advance the bill and whether the proposed rules lead to clearer regulations for exchanges, token issuers, and institutional market participants.

Bitcoin charts indicate a potential trend reversal

D’Anethan pointed out that bullish engulfing patterns have emerged on Bitcoin’s daily and weekly charts, with a similar monthly signal developing but yet to be confirmed by the candle’s close.

These patterns followed an extended period during which multiple momentum indicators remained in oversold territory. Their recovery might support a longer-term reversal, although the pace of the recent rally raises the likelihood of consolidation or profit-taking.

Bitcoin’s immediate challenge is to maintain its position around $77,000 to $80,000 following its three-month high. A sustained breakout above $80,000 would support Mei’s $80,000–$90,000 forecast, whereas a deeper retracement would refocus attention on $70,000.

The mid-$60,000 range could evolve into a broader accumulation zone for long-term investors if Bitcoin cannot sustain above $70,000, according to d’Anethan. However, the near-term direction is likely to depend on bond yields, ETF demand, and whether US policy developments yield tangible outcomes after the initial rally.