Bitcoin’s recent rebound was driven more by shifting expectations for U.S. monetary policy and large-scale liquidations of short positions than by factors specific to the crypto market, an analysis showed.

On Aug. 22, blockchain media outlet CoinPost reported that asset manager CoinShares defined the rise as a price reaction to changes in the macro environment.

CoinShares viewed the minutes of the July Federal Open Market Committee (FOMC) as containing more hawkish discussion than the decision to hold rates. It said subsequent easing inflation and weakening job growth made the case for additional rate hikes less convincing. That boosted expectations of a shift in U.S. financial policy, and bitcoin, which is sensitive to liquidity and real interest rates, also reacted. It also said record-scale short-position liquidations amplified the gains.

Moves in the U.S. Treasury market were also cited as a backdrop. Short-term yields fell as expectations for additional rate hikes weakened, while long-term yields rose on concerns about worsening public finances. CoinShares said the coexistence of easing expectations and fiscal concerns has historically been supportive for bitcoin.

An analysis also pointed to the view that a U.S. Treasury expansion of bond buybacks is only a short-term market stabilisation measure, not a structural solution. CoinShares said it could temporarily ease upward pressure on long-term yields, but increasing short-term Treasury issuance to fund it could shorten the average maturity of government debt. In that case, the government’s interest burden could become more sensitive to swings in short-term rates.

Rising long-term yields were also cited as a variable because they have effectively substituted for some tightening effects. If fiscal authorities restrain long-term yields, financial conditions could ease again, raising the possibility that the U.S. Federal Reserve keeps rates high for longer or moves to additional hikes. CoinShares said it could end up merely trading lower long-term yield burdens for other risks, including a weaker dollar and greater sensitivity to short-term rates.

On the supply-demand side, signs of improvement emerged. Large holders stopped selling and resumed accumulation, and bitcoin traded clearly above its 200-day moving average. CoinShares nevertheless expected a range-bound move for the time being, with an upper limit around $80,000.

Signs of a recovery in institutional demand also appeared. Crypto exchange-traded products (ETPs) saw weekly inflows of $2.2 billion, recorded as the largest weekly inflow this year. Of that, about $1.6 billion went into bitcoin-related products, and year-to-date flows also appear to be turning back to net inflows.

Changes in the regulatory environment were mentioned as a more direct factor for altcoins such as ether and solana than for bitcoin. CoinShares said progress related to the Clarity bill and continued dialogue between the government and the industry could make the regulatory framework clearer, which could lead to an improved outlook for the overall crypto industry.

For the long-term outlook, an asset allocation perspective was also presented. Grayscale said bitcoin is worth considering within a diversified portfolio, but unlike stocks or bonds it does not generate cash flow, making investment decisions difficult. Still, it said that considering the structural diffusion trend, the time elapsed since the recent entry into a bear market and a macro environment centred on real interest rates, it could be a favourable entry zone for long-term investors.

Ultimately, whether this rebound is sustained is expected to depend on monetary policy signals from the Jackson Hole meeting and moves in the U.S. Treasury market. In the short term, resistance is expected near $80,000, but medium- to long-term supply-demand conditions appear to be gradually improving as large holders’ re-accumulation coincides with institutional inflows.