Bitcoin has held a key support level after a sharp intraday drop, increasing the likelihood of further gains.

Blockchain outlet U.Today reported on Aug. 31 that crypto trader DonAlt assessed that bitcoin could soon enter its next upward phase.

In a post on X, formerly Twitter, DonAlt said, "It looks like bitcoin will rise once more soon." Bitcoin has shown unusually strong momentum since August and has extended its third-quarter recovery. Bitcoin was trading around $64,700 in early August, recently neared $81,000 and is now taking a breather around $78,000.

The market is focusing on signs that buying interest has remained after the recent correction. Bitcoin briefly rose above $80,000 in late August but later slipped into the $77,000 range. As the decline did not extend further and the price stabilised, an assessment has emerged that demand to buy has been confirmed below $78,000.

Comments by the chair of the U.S. Federal Reserve also increased short-term volatility. Bitfinex pointed out that bitcoin fell nearly 6 percent intraday after hawkish remarks by Fed Chair Kevin Warsh. Even so, bitcoin held around $77,100.

Institutional buying also continued. Strategy, led by Michael Saylor, bought an additional 4,603 bitcoins for about $369.7 million from Aug. 24 to 30 at an average price of $80,318. It stood out that it did not stop buying even in a period of increased end-of-month volatility.

Large fund transfers also continued. Crypto tracking firm Whale Alert tallied that 1,922 BTC worth about $149.7 million moved on Aug. 31 between two unidentified wallets. Such transactions may not necessarily mean actual buying and selling. Transfers between large wallets can also reflect internal fund reallocations, changes in custody structure or position adjustments.

Bitcoin's recent moves are also reflected in monthly and quarterly performance. The third-quarter return currently stands at about 32.48 percent, well above the historical third-quarter average return of 7.94 percent. The strength of the recovery is notable as it follows a 22.2 percent drop in the first quarter and a 14.09 percent drop in the second quarter. This is among the strongest monthly runs in recent years.

The market has not tilted uniformly toward optimism. Mike McGlone, seen as a leading bitcoin pessimist, considers it too early to conclude that a new bull market has begun. He cited Federal Reserve policy, internal competition in the crypto market and a growing correlation between bitcoin and stocks as risk factors. He argued that macro conditions remain a burden.

As a result, the market's attention is again converging on the $80,000 to $81,000 range. With bitcoin having proven support after the sharp drop, whether it breaks above upper resistance is likely to determine the next direction. If it fails to clear the range, the recent rebound could be tested again.

Looks like we're gonna get another leg up soon pic.twitter.com/YOH9KuXZT6