Bitcoin climbed sharply as improving market sentiment and strong inflows into U.S. spot exchange-traded funds helped lift the cryptocurrency after a recent selloff triggered by geopolitical tensions.

The world’s largest digital asset rebounded after dropping to around $63,000 following U.S. and Israeli strikes on Iran over the weekend. The recovery coincided with more than $680 million flowing into U.S. spot Bitcoin ETFs over the past two days, highlighting renewed institutional demand.

Futures Market Signals Fresh Bullish Positioning

Market activity suggests traders are increasingly positioning for a potential continuation of the rally. Data from crypto analytics firms shows strong demand in Bitcoin’s perpetual futures market, where open interest surged as prices began to climb. Rising open interest alongside higher prices typically indicates that traders are opening new long positions rather than simply covering short bets. The shift follows a month-long period of consolidation that had left many traders waiting for a catalyst to drive the next major move.

Bitcoin Reclaims Momentum After Months of Weakness

Despite the rebound, Bitcoin remains significantly below its peak from late last year. The cryptocurrency is still roughly 40% below its October high after enduring months of selling pressure. That backdrop has positioned Bitcoin as a potential rebound candidate as investor sentiment shifts.

In recent days, the cryptocurrency has even outperformed gold, gaining about 10% since Friday while the precious metal declined roughly 2% over the same period.

Rotation From Gold to Crypto?

Some market observers believe capital may be rotating back into cryptocurrencies after a strong run in gold earlier this year. Gold had surged while Bitcoin struggled, widening the performance gap between the two assets. As market sentiment stabilizes and risk appetite returns, investors may be looking for opportunities in assets that lagged behind the broader rally.

The long-standing narrative of Bitcoin as “digital gold” has often resurfaced during periods of geopolitical uncertainty, though the relationship between the two assets has remained inconsistent.

Volatility Remains a Major Risk

Despite the rebound, analysts caution that cryptocurrency markets remain fragile. The conflict in the Middle East continues to evolve, and broader market volatility could quickly reverse recent gains.

Bitcoin is particularly sensitive to moves in global equities and changes in investor leverage. If stock market volatility intensifies, institutional investors may reduce risk exposure across multiple asset classes, including crypto.

For now, Bitcoin’s recovery highlights how quickly sentiment can shift in digital asset markets, especially when large institutional inflows return.