Bitcoin prices have risen about 9% in September and reached their highest levels in eight months on Tuesday. There have been several reasons for the surge, including a regulatory move to make it easier to offer tokenized stocks to investors.
At midday Tuesday, Bitcoin had risen 0.2% over the past 24 hours to $85,999, according to CoinDesk. The cryptocurrency, however, traded as high as $87,359 intraday, its highest since Jan. 29, according to Dow Jones Market Data.
Bitcoin prices for September have risen 8.8% after gaining 25% in August.
The rally among cryptocurrencies accelerated Friday and over the weekend with crypto-related stocks also advancing.
Strategy stock has risen 27% since the closing bell on Thursday. Digital-asset exchange Coinbase Global has advanced 14% since then while online trading platform Robinhood Markets has gained 12%.
Strategy rose 0.1% to $168.63 on Tuesday while Robinhood stock gained 0.7% to $124.08. Coinbase stock also rose 0.6% to $123.94.
The performance by cryptocurrencies and stocks has come even as the Clarity Act collapsed and the Federal Reserve boosted interest rates. But the world's largest cryptocurrency has shown resilience as the Securities and Exchange Commission last week issued temporary exemptions, an important regulatory decision for the sector.
The failure of the Clarity Act, a key piece of crypto legislation, might ordinarily have been expected to weigh on cryptocurrencies, but traders have largely looked past it and focused on the agencies responsible for interpreting and enforcing existing regulation.
B. Riley analyst Fedor Shabalin on Tuesday raised his price target on Strategy to $195 from $175 on the strength of the recent rally in cryptocurrency prices.
With much of the rise in Bitcoin and other cryptocurrencies taking place over the weekend, Shabalin wrote that the main reasons were due to liquidity and positive sentiment rather than any change in fundamentals.
The analyst wrote that lower oil prices on de-escalation in the Middle East collided with crowded short positioning in cryptos.
This triggered a short squeeze that liquidated about $650 million of shorts in 24 hours and boosted Ethereum, the second largest cryptocurrency, and Solana, according to Shabalin.
Traders were also positioning into President Donald Trump's meeting with China's leader Xi Jinping, the analyst added.
Shabalin noted that Trump's meeting with Xi and the continued ramifications from SEC's innovation exemption are at least two of the near-term catalysts for crypto-related stocks.
Investors might have been taking a breather on Bitcoin and crypto-related stocks on Tuesday but the sentiment around the sector has certainly shifted.