The Bitcoin price has jumped more than 25% since its recent low, moving from around US$ 64,000 in mid-August to about US$ 80,000. The recovery has reignited a question among investors: is the move just a bounce after a sharp drop, or the start of a new bull cycle?
For Pedro Fontes, a research analyst at Mercado Bitcoin, two charts help explain why the market has regained strength: seller exhaustion and the price recovering relative to key investor cost-basis averages. His reading is that Bitcoin has left behind a phase of intense pressure, but still needs to confirm demand to sustain the turnaround.
According to him, BTC started August on a decline, breaking through significant support levels and even dropping below important average-price regions. This kind of move usually indicates that some recent investors were in the red and began selling to cut losses. The turnaround came when the market absorbed that selling pressure and reclaimed technical levels followed by traders and short-term investors.
This chart shows precisely that the market went through a phase of capitulation or seller fatigue, in which the supply from those wanting to exit began to lose strength. In practice, this helps explain why Bitcoin found support after the drop and was able to rebound strongly.
Beyond the technical reading, Fontes points out that the rally was also helped by macroeconomic factors. One of the main triggers came from the United States, after Treasury Secretary Scott Bessent announced that the government would double the volume of long-bond buybacks, from US$ 2 billion to US$ 4 billion per operation, starting on 9 September.
The market interpreted the move as an attempt to ease long-term rates and reduce the cost of refinancing US debt. As a result, bond yields eased, the dollar weakened and assets such as Bitcoin and Ethereum reacted. According to the Mercado Bitcoin analyst, over the same period in which Bitcoin rose about 25%, Ethereum advanced more than 40%, Hyperliquid rose 44% and Solana gained nearly 38%.
Another point raised by Fontes is that Bitcoin held up even against news that, at other times, might have triggered risk aversion. He cites the United States' attacks on nuclear facilities in Iran and notes that, despite the geopolitical shock, the market treated the episode as contained, with no immediate escalation in oil prices or on other global fronts.
Price broke back above key average
The second chart highlighted by Fontes shows Bitcoin's price behaviour relative to a cost-basis region tracked by the market. According to him, when BTC trades back above this average, some investors who were in the red return to profit, which can ease selling pressure and create a base for a recovery.
This chart shows how the price has stopped merely reacting and has begun breaking through a zone that, in the past, marked significant trend changes. In light of this, Fontes compares the current dynamic with movements seen in 2023, when Bitcoin also crossed key averages before sustaining a bull phase.
Even so, the Mercado Bitcoin analyst avoids treating the rally as a definitive turnaround. According to him, a more consistent reversal will depend on Bitcoin's ability to attract and sustain demand going forward. Among the signals that would confirm the positive reading are BTC holding above the US$ 70,000 to US$ 71,000 region, continued ETF inflows and new US Treasury measures reinforcing the decline in long-term rates.
ETFs appear as an important part of this equation. After months of weaker interest, the funds registered significant inflows again in late August. For the analyst, continued flows of this kind would help show that the rally was not just a technical move or a short squeeze, but also a return of institutional demand.
On the other hand, the reading would be weakened if ETFs return to outflows and if Bitcoin loses the US$ 70,000 to US$ 71,000 region without a quick recovery. In that scenario, the recent rally could be interpreted as merely a recovery within a still-undefined trend, rather than the start of a new bull cycle.
Fontes's conclusion is that Bitcoin shows more constructive technical signals than a few weeks ago, but still needs to confirm strength. For conservative investors, the recommendation is to wait for confirmation before increasing exposure. For moderate and more aggressive profiles, the reading is that the window is beginning to improve, provided position sizes respect the market's volatility.
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