The crypto market opened the week with its sharpest movement since August.
As of the morning hours, Bitcoin was trading at around $85,500, a daily increase of about 5% and a weekly rise of about 10%, after crossing $87,000 during trading to reach its highest level since January. Ethereum was trading around $2,734, up about 2.7% on the day and roughly 9.4% for the week. XRP jumped about 6.4% to $1.51, and Solana was trading around $116.7 after a nearly 15% weekly surge. Dogecoin stood out even more with a weekly increase of about 21%.
The market capitalization of the entire crypto sector climbed to about $2.9 trillion, a gain of nearly 4% in 24 hours, as trading volumes nearly doubled.
The reason begins entirely outside crypto
The rally is not disconnected from events in traditional markets.
On Monday, the Nasdaq jumped 2.26% to a new record, driven by a rally in technology stocks. At the same time, the yield on US 10-year Treasury bonds fell below 5%, and oil prices retreated following hopes for an easing of tensions in the Middle East.
For crypto, this is a relatively favorable combination. Cheaper oil reduces some inflation fears, falling yields make bonds less attractive relative to risk assets, and gains in tech stocks signal that investors are once again willing to take on more risk.
This is occurring even though the Federal Reserve raised interest rates last week, which is usually considered negative news for Bitcoin.
Those who bet on declines were forced to buy
The gains received an additional boost from the derivatives market. According to CoinMarketCap, about $1.33 billion in leveraged positions were liquidated in 24 hours, including roughly $783 million in short positions.
When the price rises rapidly, traders who bet on a drop are forced to close their positions by buying. These purchases push the price even higher, creating a chain reaction known as a short squeeze.
Bitcoin reached $86,332 during Monday, and short position liquidations approached $800 million early in the rally.
Big money is also returning
There are also signs of demand that does not originate solely from leveraged traders.
Michael Saylor's Strategy company resumed purchasing Bitcoin after a pause of several weeks, acquiring another 950 coins for $75.7 million. The company now holds 846,000 Bitcoins.
At the same time, inflows returned to US spot ETFs, a factor that analysts consider an important condition for continued gains. Bitfinex emphasized that for the breakout to turn into a stable trend, the market will also need to see real purchases in the spot market, not just short covering.
A new bull market, or another temporary rally
Quite a few analysts have already declared that the crypto market has entered a "new bull market" after Bitcoin rose by about 50% within two months and broke the pattern of lower highs that had persisted since 2025.
However, it is still too early to determine that the winter is over. Although Bitcoin has returned to $85,000, it remains more than 30% below its all-time high of about $126,000, set in October 2025.
This time, at least, the rise is broader than just Bitcoin. Crypto, tech stocks, and risk assets are moving up together. If the flow of money continues even after shorts have been liquidated, that will be the more significant signal that this is not merely another sharp jump within a volatile market.