- Bitcoin surged as high as $79,500 on Friday as Bernstein pointed to improving liquidity conditions as a key driver of the rebound.
- U.S. spot Bitcoin ETFs attracted $1.6 billion this week, reversing heavy outflows recorded during May and June.
- Bernstein believes stronger liquidity, institutional demand and improving U.S. crypto regulation could support a broader shift in market momentum.
Bitcoin’s sharp rebound toward $80,000 could signal more than another short-term rally, according to Bernstein analysts, who see improving liquidity, returning ETF demand and regulatory progress creating a stronger backdrop for crypto.
Bitcoin reached as high as $79,500 on Friday before easing toward $78,000. Bernstein linked part of the move to the U.S. Treasury’s decision to at least double liquidity-support buybacks for longer-dated government debt to $4 billion per operation.
Liquidity Conditions Turn More Supportive
Bernstein analysts led by Gautam Chhugani said Bitcoin has historically responded positively to expanding liquidity.
Crypto struggled earlier this year as tighter financial conditions following the Iran conflict combined with heavy investor interest in AI and semiconductor stocks. Bernstein believes that dynamic could now be shifting, particularly as AI infrastructure spending increasingly relies on debt markets.
Additional liquidity entering financial markets could ultimately spill into Bitcoin and other scarce assets as investors look for alternatives and potential hedges.
Bitcoin ETF Demand Rebounds
Institutional demand is also returning. U.S. spot Bitcoin ETFs attracted around $1.6 billion in net inflows this week, including $606.3 million on Thursday. Combined assets in the funds have climbed above $85 billion after falling to roughly $70 billion in June.
BlackRock led Thursday’s activity, with approximately $503 million flowing into its IBIT fund. The rebound follows around $7 billion in ETF outflows during May and June, making the recent reversal an important sign that institutional demand may be recovering.
Strategy Returns to Profit
Bernstein also pointed to improving conditions at Strategy, the largest corporate Bitcoin holder.
Strategy currently holds 840,447 BTC purchased at an average price of $75,385. With Bitcoin trading near $78,000, the company’s position has returned to an unrealized profit of more than $2 billion.
Bernstein expects Strategy could eventually resume Bitcoin purchases as its balance sheet stabilizes and its preferred stock moves closer to its nominal value.
Regulation Adds Another Catalyst
The regulatory environment could provide another source of momentum. Bernstein expects the SEC and CFTC to accelerate crypto rulemaking even if Congress fails to pass the Clarity Act.
Potential rules covering crypto issuance, tokenized equities, perpetual futures, prediction markets and other digital assets could provide greater certainty for institutional investors.
With Bitcoin approaching $80,000, ETF capital returning and liquidity conditions improving, Bernstein believes the latest rally could represent a more meaningful shift in momentum rather than another temporary rebound.
