Bitcoin surged past $80,000 on Tuesday as renewed inflows into spot Bitcoin ETFs and improving risk appetite extended the cryptocurrency market’s recent rally.

The world’s largest cryptocurrency climbed more than 2% to around $80,501, continuing a sharp rebound that began last week. Bitcoin gained more than 20% over three days, marking its strongest three-day performance since 2023.

The initial rally was partly driven by a major short squeeze, with more than $4 billion worth of bearish crypto positions liquidated as prices moved rapidly higher. The forced unwinding of short positions added momentum to the rebound and helped Bitcoin recover from its prolonged weakness since October.

Broader market conditions have also supported the move. The U.S. Treasury recently announced plans to double its purchases of longer-dated government bonds, briefly pushing Treasury yields lower and improving demand for risk assets. At the same time, concerns surrounding inflation and rising government debt have increased interest in scarce assets such as Bitcoin.

Institutional demand has also returned strongly. U.S. spot Bitcoin ETFs recorded $1.92 billion in net inflows last week, their largest weekly inflow since October, when Bitcoin reached its previous cycle peak. The renewed ETF demand suggests institutional investors are becoming more willing to increase their exposure following months of weaker sentiment.

Fundstrat said the buying activity following last week’s short squeeze indicates that Bitcoin’s rebound could prove more durable than a temporary tactical bounce. The firm pointed to strong inflows into both Bitcoin and Ether ETFs, increased trading activity and growth in stablecoin issuance as signs of improving demand across the broader crypto market. Stablecoins are commonly used by investors to move capital into cryptocurrencies.

Activity in the options market has also shown signs of greater confidence. Unlike some previous rebounds, when traders mainly positioned for short-term gains, investors are increasingly paying for exposure to potential Bitcoin gains further into the future. This suggests expectations for the recovery may be extending beyond the immediate rally.

Other major cryptocurrencies also advanced on Tuesday. Ether rose 1.17% to around $2,498, while XRP gained 2.6% to $1.52. XRP has climbed roughly 50% over the past seven days as improving sentiment spread across the broader digital asset market.

Despite the stronger momentum, uncertainty remains over whether Bitcoin can sustain its breakout above $80,000. BTIG noted that a similar surge in January 2023 initially lost momentum before Bitcoin eventually found support around its 200-day moving average.

Another potential catalyst could come from Strategy, the world’s largest corporate holder of Bitcoin. The company has not purchased Bitcoin for two weeks, meaning the latest rally has occurred without fresh buying from one of the market’s most prominent corporate investors. Fundstrat noted that if Strategy resumes purchases while ETF inflows remain strong, the combination could provide additional support for Bitcoin prices.

For now, the move above $80,000 marks an important recovery for Bitcoin, with stronger institutional inflows, improving market sentiment and broader crypto participation providing support for the latest rally.

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