Bitcoin rose above $85,400 on September 21, reaching its highest level since late January as renewed inflows into U.S. spot Bitcoin exchange-traded funds (ETFs) and a wave of short liquidations accelerated the rebound.

BTC gained 5.5% over 24 hours, lifting Bitcoin’s market capitalization to $1.71 trillion. The broader cryptocurrency market increased 4.7% to $2.95 trillion, although Bitcoin dominance fell below 58% as altcoins also advanced.

The move above $85,000 extends Bitcoin’s recovery from the sharp decline earlier this month. BTC remains below its October all-time high near $126,000, but the latest rally has returned the asset to levels that were closely watched before the September sell-off. The price is now approaching $88,000, while traders are assessing whether the recovery can continue. The pace of the rebound stands out: Bitcoin traded near $75,000 in the days after the Senate’s September 15 vote, meaning the asset has climbed roughly 14% from those levels in under a week.

Bitcoin Reclaims $85,000 Despite Recent Headwinds

The rebound has taken place despite several recent developments that had weighed on the market. The U.S. Senate failed to advance the Clarity Act on September 15 after the bill received 50 votes in favor and 49 against, short of the 60 votes required to proceed. The bill would establish a market-structure framework for digital assets, dividing oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Bitcoin subsequently traded near $75,000.

The Federal Reserve then raised its benchmark interest-rate target by 25 basis points on September 16, bringing the federal funds target range to 3.75%-4%. Rate increases of this kind raise the cost of leverage across financial markets, a sensitivity that extends to cryptocurrencies. Bitcoin has nevertheless recovered rapidly from those levels.

Short Liquidations Add Buying Pressure

More than $787 million in cryptocurrency positions were liquidated over the previous 24 hours, according to CoinGlass data. Short positions accounted for approximately $664.3 million of the total.

Bitcoin positions represented $431.7 million of the liquidations. The largest single liquidation order was valued at $11.29 million on Binance’s BTCUSDT market.

“Shorts accumulated between $82k and $86k for months, however the rejection from this level was shallow,” crypto analytics firm Glassnode said on X. “Now these shorts are the fuel, as these traders are required to buy back BTC.” The post is available on X.

When leveraged short positions are forced to close as prices rise, traders must buy back the underlying asset. That process can add buying pressure while the market is moving higher, contributing to the latest liquidation-driven advance.

Spot Bitcoin ETF Inflows Recover

Renewed demand has also appeared in U.S. spot Bitcoin ETFs. The funds attracted combined inflows of $593 million on Thursday and Friday, offsetting losses from the difficult previous week, according to SoSoValue.

Friday’s $433 million inflow was the largest single-day total since September 3. Fidelity’s FBTC and BlackRock’s IBIT accounted for most of the inflows. Spot ETFs hold Bitcoin directly and can be bought through ordinary brokerage accounts, and their daily flow reports have been a widely watched gauge of demand since the products began trading in the United States in January 2024.

Strategy Adds Another 950 BTC

Strategy Inc. provided another source of buying demand. The company acquired 950 BTC for approximately $75.7 million, paying an average of $79,670 per Bitcoin between September 14 and September 20. Strategy, which has made Bitcoin its primary treasury reserve asset, is the largest publicly disclosed corporate holder of the cryptocurrency, making its weekly purchase disclosures a closely followed data point on institutional accumulation.

Strategy Executive Chairman Michael Saylor said on X that the company now holds 846,000 BTC. His post stated:

Strategy has acquired 950 $BTC and repurchased $174M of $STRC . As of 9/20/26, we hold 846,000 BTC and $6.09B of USD Assets. $MSTR — Michael Saylor (@saylor) September 21, 2026

The post is also available on X.

Strategy’s Bitcoin holdings are now worth roughly $71.9 billion based on current prices. The company’s average acquisition price is $75,416 per BTC. That position equals roughly 4% of Bitcoin’s capped maximum supply of 21 million coins.

Oil Prices Ease as Rate Risks Remain

The broader macroeconomic backdrop has improved somewhat. Brent crude fell approximately 1.5% on Monday as oil supply conditions improved and diplomacy involving Iran resumed. The decline eased some inflation concerns and supported risk sentiment.

Monetary policy remains a potential headwind for risk assets, however. The Federal Reserve’s latest 25-basis-point rate increase keeps interest-rate risks relevant to the cryptocurrency market, and future policy decisions remain a variable for traders to track alongside on-chain and flow data.

Market Focus Turns to $88,000

With Bitcoin back above $85,000, attention has shifted to the next major price levels. Crypto market analyst Ted Pillows said Bitcoin has no major sell orders before $88,000. His analysis is available on X.

His separate liquidity data, however, shows nearly 12 times more liquidity on the downside than on the upside. The data presents a mixed picture: the immediate sell-side order book may be relatively thin, while deeper liquidity remains concentrated below the current price. Upcoming daily ETF flow reports and liquidation figures will show whether the demand drivers behind the rebound are being sustained.

This article was originally published by DailyCoin.