Bitcoin surges 3.8% to $109,600 as U.S.-China trade talks boost demand

Bitcoin's price surged by approximately 3.8% over the past 24 hours, briefly surpassing the $110,000 mark before stabilizing around $109,600 by Tuesday morning. This rally marks Bitcoin’s strongest performance in June so far, reversing last week’s decline that saw the asset dip near $100,000. The current price is just 3% below its all-time high, indicating a significant upward momentum.

The recent rally is driven by a combination of trading activity, on-chain signals, and macroeconomic developments. Nearly $203 million in positions were liquidated in the Bitcoin market over the past day, with $195 million of those being short positions. This highlights the strength of the upward momentum in the market. Additionally, derivatives volume more than doubled, rising 113% to $110.63 billion, and open interest grew by 7.3% to $76.6 billion, showing fresh capital entering the market as traders repositioned.

A key external driver of this rally appears to be the easing tensions between the U.S. and China. Trade negotiations resumed, with hopes of a deal that could reduce tariffs and lighten export restrictions. Market sentiment improved as talks got underway, raising demand for riskier assets like Bitcoin.

However, the real story may lie in what’s happening on-chain. Bitcoin reserves on centralized exchanges have dropped from 1.55 million in July 2024 to just 1.01 million BTC today, a reduction of 550,000 coins in under a year. This steady withdrawal indicates long-term holding, as more Bitcoin leaves exchanges, available supply shrinks. If demand rises at the same time, as it appears to be, prices typically move up. The pattern is consistent with the notion that Bitcoin is no longer viewed as a trading asset but as digital gold.

Further data indicates that U.S. investors’ demand is increasing. The “Coinbase Premium” indicator shows that Americans are paying more to purchase Bitcoin, a pattern frequently observed during the accumulation stages. Whale activity is also increasing, with renewed accumulation seen across wallet sizes, especially among those holding between 10 and 100 BTC.

Despite the optimism, there remains some caution. Bitcoin is still correlated to the larger equity market, which could limit short-term gains if macro headwinds reappear. Furthermore, traders cite futures data as evidence that not everyone is certain of a breakout. Rather than long-term conviction, short-term speculation or hedging may have contributed significantly to the recent volume. Traders are still placing bets in both directions, and while liquidations heavily leaned against shorts, such volatility often indicates indecision. In these conditions, it only takes a modest reversal or macro shock to shake weak hands out of the market.

Even so, the mood is turning optimistic. Many analysts are already calling for new all-time highs in the coming days, some even eyeing $150,000 by the end of the year, especially if U.S. debt levels keep climbing.