Bitcoin Bulls Eye $80,000 as Options Market Flips Bullish

Bitcoin's late summer rally shows no signs of slowing down, despite a potentially bearish Federal Reserve rate decision this week. The world's largest cryptocurrency has rebounded past $70,000 in recent weeks, after languishing at two-year lows of around $60,000.

The surge is attributed to improving sentiment and a rotation back into crypto assets. Options traders are bullish, with the 25-delta skew turning positive on August 20, indicating a premium to buying upside calls. The options market has also flipped bullish for the first time in 12 months, with many traders betting bitcoin could hit $80,000 or higher by December.

However, analysts warn that inflation and Middle East tensions remain headwinds for the asset. Federal Reserve rate hikes typically suck liquidity out of risk assets like bitcoin. But some bulls argue that the Treasury's increased buybacks could stoke concerns about dollar debasement, boosting demand for scarce assets such as bitcoin.