Bitcoin surged above the $85,000 mark on Monday to an eight-month high.

The flagship cryptocurrency continued its red-hot rebound, adding 5% in early afternoon London trading to $85,128 after an uplift of nearly 6% last week. Investors shrugged off two potential hurdles--a failure to pass the Clarity Act, as well as the Federal Reserve's quarter-point interest-rate hike--to finish the week higher.

It is now up by more than 30% since Aug. 19 and is holding firmly above the $80,000 level that had proved to be a stubborn cap in recent weeks.

"Cryptocurrencies are advancing in a group this morning, a move given strength by recent inflows and one likely to attract even more of those vital funds," said Chris Beauchamp, IG's chief market analyst. "Perhaps investors are realizing that they can live in a world of higher U.S. rates, though falling oil prices certainly help too."

Bitcoin's move higher is supported by stronger exchange-traded fund inflows, positive regulatory developments and investors closing earlier bets against the cryptocurrency, Zaye Capital Markets analyst Naeem Aslam wrote in a note.

Monday's rally looks set to spread to other crypto-related assets, with Coinbase Global and Robinhood Markets adding 5.5% and 5.3% in premarket trading, respectively.

"This leg looks different," Yusuf Fakhro, partner at Bahrain-based platform ARP Digital, said. "It is being led by steady inflows into U.S. spot Bitcoin ETFs, which came back strongly after the Fed decision and recovered most of the outflows seen around it. That demand has been enough to absorb the coins long-term holders are selling into strength, which is exactly what you want to see."

Investors are looking ahead to the planned summit between U.S. President Trump and Chinese President Xi Jinping on Thursday. A truce in the tariff war is due to expire on Nov. 10, and any progress made to ease trade tensions could boost sentiment for risk assets including cryptocurrencies.