How Policy Shifts, Geopolitical Tensions Are Reshaping the Bitcoin Trade

In brief

• Bitcoin is up about 6.8% in 24 hours to $72,800, though it remains about 42% below its October all-time high following a months-long downturn.
• Nearly $700 million flowed into U.S. spot Bitcoin ETFs across Monday and Tuesday, reversing four months of steady outflows, according to BTC Markets.
• Analysts are hopeful developments including Kraken’s access to Federal Reserve payment rails and renewed legislative momentum in Congress could signal a structural turning point for crypto.

Bitcoin’s latest rebound is prompting investors to reassess the forces shaping the crypto market, as policy momentum in Washington and rising geopolitical tensions converge with signs that the worst of the recent selloff may have passed. The world’s largest crypto traded around $72,800 on Wednesday, up about 6.8% over the past 24 hours, according to CoinGecko data. Even after the rebound, Bitcoin remains roughly 42% below its October all-time high near $126,000. Users of Myriad Markets, owned by parent company Dastan, now see a 57% chance of Bitcoin reaching $84,000 instead of falling back to $55,000, reflecting a 7% shift over the past 24 hours. 

Market participants said the shift reflects a combination of structural catalysts rather than a simple relief rally. “Bitcoin’s push above $74,000 overnight isn’t noise,” Rachael Lucas, crypto analyst at BTC Markets, told Decrypt in an emailed statement, describing the move as the market “finally exhaling after months of relentless selling pressure.”  Having fallen from its October high and logging five consecutive monthly declines, the market has largely “wrung out the weak hands,” Lucas said. Lucas pointed to nearly $700 million in spot U.S. Bitcoin ETF inflows on Monday and Tuesday, marking a sharp reversal after four months of steady outflows.

A more vocal push for crypto policy in Washington is also helping to shape a more positive outlook, even as crypto valuations remain compressed.  On Tuesday, President Donald Trump urged Congress to move quickly on digital-asset market-structure legislation, accusing major banks of attempting to undermine the administration’s crypto agenda. Trump warned that delays risk pushing the industry overseas and called for the rapid passage of the CLARITY Act, a bill designed to define whether digital assets fall under the oversight of the Securities and Exchange Commission or the Commodity Futures Trading Commission. The legislation has stalled amid a dispute between banks and crypto firms over whether stablecoin platforms should be allowed to offer yield to users.  JPMorgan Chief Executive Jamie Dimon has argued that companies paying rewards on stablecoin balances should instead operate under banking rules. Regulators, meanwhile, continue integrating crypto infrastructure into the financial system.  Kraken’s banking unit recently secured approval for a Federal Reserve master account, granting the exchange direct access to the Fed’s payment rails and enabling it to move dollars through the central bank’s core systems. Banks were, once again, quick to push back on the move, citing systemic financial risks and a violation of the Fed’s own policies.

Analysts at fintech prime brokerage and clearing firm Clear Street said Wednesday the convergence of policy progress, infrastructure integration, and institutional adoption may mark a turning point for the industry. “This shift could essentially end the crypto bear market and trigger the beginning of a bull run,” they said in an investor note. Bitcoin’s rebound has unfolded as fighting between Israel and Iran entered its fifth day, raising concerns about energy markets and global financial stability. Yet crypto’s response has been comparatively resilient.  Analysts at crypto brokerage K33 said Wednesday several technical indicators have reached levels historically associated with market bottoms, echoing conditions seen during the 2022 collapse of FTX. “The worst is behind us; now we wait,” K33 researchers wrote in a note on Wednesday, adding that bottoming phases for Bitcoin have historically unfolded gradually.