Bitcoin faces $80,000 test as thinner weekend liquidity looms

Bitcoin $BTC$77,602.44 heads into Friday’s U.S. session having hit its highest level since May as the U.S. Treasury’s bond-buyback plan continues to fuel appetite for risk.

The largest cryptocurrency recently traded near $78,000 after climbing to as high as $79,400, leaving $80,000 as the immediate test before trading in exchange-traded funds (ETFs) shuts for the weekend. The spot U.S. bitcoin ETFs posted net inflows of $606 million on Thursday, the most since May 1.

“The rally is primarily a macro story rather than a crypto specific one,” CoinShares’ head of research, James Butterfill, said in a statement. “Bitcoin remains acutely sensitive to shifts in liquidity expectations and real yields, and it has responded accordingly.”

His comments came after a lower-than-expected CPI print and weaker payrolls data that followed the Treasury’s announcement that it planned to take action to bring down long-dated bond yields.

To Butterfill, the $80,000 level is now an “important boundary” for $BTC, with a decisive move likely to require confirmation that Federal Reserve policy is moving away from further tightening, which could emerge at next week’s Jackson Hole symposium.

Before then, U.S. flash PMI readings later today could move yields and the dollar. Higher yields make risk assets like crypto less attractive.

Other risks also remain. Sticky inflation and a weakening dollar could force the Federal Reserve to “compensate at the front end,” Butterfill said.

“With accumulation by large holders still modest in scale, the market lacks the depth of conviction that typically underpins a durable breakout,” he said. Spot U.S. ETF data from today’s session will help further show how institutions are perceiving the rally.

Once U.S. markets close, bitcoin will lose the ETF bid and pass into thinner weekend trading, where it will be more vulnerable to geopolitical developments affecting oil prices. Stay alert!

Read more: For analysis of today’s activity in altcoins and derivatives, see Crypto Markets Today . For a comprehensive list of events this week, see CoinDesk’s “Crypto Week Ahead.”

What’s trending

• Treasury’s latest measure isn’t QE or YCC. Still, bitcoin is skyrocketing. Here’s why. (CoinDesk): The rally isn’t necessarily about what the U.S. Treasury is doing, but what its move signals to the market.
• Strategy sits on $1.4 billion profit on bitcoin holdings as price surges (CoinDesk): Strategy had been sitting on an unrealized loss for much of the year as the price of bitcoin fell roughly 54% from its October high.
• Ripple backs an $RLUSD credit fund amid $XRP’s best week in months (CoinDesk): Ripple is backing a new institutional credit fund that will lend its $RLUSD stablecoin to fintech and payments companies on the $XRP Ledger, alongside lending platform Clearpool and credit manager Cicada Partners.
• Global stocks set for biggest weekly fall since mid-July as bond yields, oil stay high (Reuters): Global stocks were set for their biggest weekly fall since mid-July, as the strain in global bond markets showed little sign of abating, while diplomatic deadlock in ​the Gulf lifted oil prices to one-month highs and kept inflation risks to the fore.