Bitcoin continued to hover around its highest level since late January on Wednesday, as hopes for diplomacy in the Middle East conflict helped support the digital currency after a strong start to the week.

The flagship cryptocurrency was broadly flat at $86,239 in morning London trade, having briefly punched above $87,000 earlier in the session. Investor sentiment improved on Tuesday after President Trump said that U.S. officials had a "very good meeting" with Iran on the sidelines of the United Nations General Assembly in New York.

Saudi Arabia, meanwhile, began running tests on its East-West pipeline on Tuesday in a step toward restoring flows as soon as this week after it was damaged by drone attacks earlier this month, the Wall Street Journal reported.

Bitcoin had reached its highest level since late January on Monday at $87,315, partially anchored by fund investors moving capital back into bitcoin ETFs. Coinglass data showed a net inflow of nearly $1 billion into bitcoin ETFs on Monday. JPMorgan estimates it was the best day of flows since early October 2025--just before its all-time high.

Gains this month stand at around 11.5%--far below August's rally but still notable as positive returns have come despite a recent Fed rate increase, as well as the cryptocurrency-focused Clarity Act's failure to pass a crucial Senate vote.

After several months of moving in line with gold, Bitcoin's correlation with the yellow metal has broken down this week, according to Ipek Ozkardeskaya, senior analyst at Swissquote.

"We've seen that positive correlation weaken and even reverse: gold remains under pressure whereas Bitcoin is strongly bid in tandem with technology stocks," the analyst wrote in a note.

"The latter divergence suggests that the weight of the dominant macroeconomic drivers could be weakening. As the most intense phase of the global rate-hiking cycle fades, we could see fresh trends emerge as markets refocus on asset-specific fundamentals," Ozkardeskaya added.