Bitcoin is back above $85,000, reaching its highest level since January and extending a rally that has pushed the cryptocurrency nearly 35% higher over the past three months.
That naturally raises the question of whether the long “crypto winter” is finally ending. But there may be a more important signal buried in this rally: Bitcoin is climbing just days after Washington delivered what should have been a significant setback for the crypto industry.
That disconnect could tell investors more about Bitcoin’s next move than the $85,000 price itself.
Bitcoin Is Suddenly Moving Again
Bitcoin climbed above $85,000 Monday, its highest level in about eight months. The cryptocurrency has gained more than 7% over the past five days, although it remains well below the record above $126,000 reached in October 2025.
The move has been strong enough for Matt Hougan, chief investment officer at Bitwise, to declare that the “crypto winter” is over. He told CNBC that he believes investors could be entering the strongest and longest-running crypto bull market yet.
There are some real reasons behind that optimism. Institutional participation in crypto continues to expand, major firms such as BlackRock are now deeply involved in the market, and activity across blockchain networks has continued even while crypto prices struggled.
The latest rally has also been amplified by traders who were betting against Bitcoin. As the price climbed, bearish positions were forced to unwind, creating additional buying pressure and helping accelerate the move higher.
But the most interesting part of the rally may be what happened immediately before it.
Bitcoin Just Shrugged Off a Major Washington Setback
Less than a week ago, the outlook looked considerably worse.
The Senate failed to advance the CLARITY Act, legislation designed to establish a comprehensive federal framework for digital assets and clarify the regulatory roles of the Securities and Exchange Commission and Commodity Futures Trading Commission.
The procedural vote fell well short of the 60 votes required to advance. With Congress moving closer to the November midterm elections, the chances of comprehensive crypto legislation passing this year have narrowed considerably.
Bitcoin initially reacted exactly as investors might expect. Following the failed vote, the cryptocurrency dropped below $76,000 and briefly traded below $75,000.
Less than a week later, it was above $85,000.
That reversal matters because regulatory clarity has been one of the biggest arguments supporting higher long-term crypto valuations. The theory has been straightforward: clearer rules should encourage banks, asset managers and other large institutions to commit more capital to digital assets.
Congress just failed to deliver those rules, and Bitcoin rallied anyway.
Washington May Matter Less Than It Used To
The failure of the CLARITY Act doesn’t mean crypto regulation disappears. Instead, much of the responsibility remains with federal regulators operating under existing authority.
The SEC and CFTC are already moving forward with digital-asset initiatives, and the regulatory environment today is considerably more receptive to crypto than it was during previous cycles. Hougan argues that this could actually soften the impact of Congress failing to act because the agencies currently overseeing the industry have taken a more crypto-friendly approach.
There is still a major tradeoff. Legislation passed by Congress could establish rules that are more durable across presidential administrations, while agency policies can change depending on who controls Washington.
For markets, however, the immediate question is whether regulatory uncertainty is preventing capital from entering crypto. Bitcoin’s latest move suggests investors aren’t particularly worried about it right now.
And there may be another source of money entering the market.
Is Money Rotating From AI Into Crypto?
For the past several years, artificial intelligence has dominated the momentum trade. Nvidia, semiconductor companies, data-center operators, power producers and other AI-related investments absorbed enormous amounts of investor attention and capital.
Hougan believes that may finally be changing. He argues that the AI boom had “sucked all the oxygen out of the room” for momentum investors and that some of that money is now rotating back toward crypto as the AI trade cools.
It’s an interesting theory because Bitcoin has many of the characteristics momentum investors typically look for. It trades around the clock, has enormous liquidity, can now be accessed easily through traditional ETFs and has a history of producing rapid moves once momentum begins building.
Investors don’t have to abandon AI for this rotation to matter. Even a relatively small shift in speculative capital toward Bitcoin could have an outsized impact, especially if rising prices attract additional momentum traders.
That makes the relationship between AI stocks and crypto worth watching over the next several months.
Three Bitcoin Levels Matter Now
The first level is $75,000, which BTIG analysts recently identified as an important area of support. Bitcoin’s rapid recovery after briefly falling below that level following the CLARITY vote suggests buyers were willing to step in aggressively. A sustained move back below $75,000 would weaken that argument.
The next level is $90,000. Breaking through it would put Bitcoin back within striking distance of six figures and could attract another wave of momentum trading.
Then there is the big number: $126,000, Bitcoin’s October 2025 record.
Bitcoin is still roughly 30% below that peak, which is why declarations of a completely new bull market deserve some caution. If Bitcoin begins closing that gap, however, the conversation around crypto could change quickly.
Crypto Stocks Can Provide a Second Opinion
Bitcoin isn’t moving alone. Crypto-related stocks including Coinbase and Strategy have also risen alongside the cryptocurrency, giving investors another way to judge the strength of the rally.
If Bitcoin continues higher while Coinbase, miners and other crypto-linked equities participate, it would suggest enthusiasm is spreading across the broader industry rather than remaining isolated to Bitcoin.
The opposite would also be worth watching. If Bitcoin keeps climbing while crypto-related stocks begin falling behind, investors may want to look more closely at what is driving the move.
In that sense, crypto equities can provide a useful second opinion on Bitcoin’s rally.
There Is Still One Big Risk
Bitcoin remains an extremely volatile asset, and some of the recent move has almost certainly been fueled by momentum.
That can become self-reinforcing. Rising prices force short sellers to cover their positions, which creates additional buying, pushes prices even higher and attracts more momentum investors. The same process can reverse quickly when prices begin falling.
Interest rates and overall market liquidity remain important as well. Higher Treasury yields and tighter financial conditions can reduce investors’ appetite for speculative assets, while easier monetary conditions generally make risk-taking more attractive.
That’s why the next several weeks could tell investors considerably more than the initial move through $85,000. If Bitcoin can hold these gains after the short covering and excitement surrounding the breakout fade, the case for a more durable rally becomes stronger.
The Bigger Signal From Bitcoin’s Rally
Forget the “crypto winter” label for a moment. Bitcoin has already provided investors with something more useful.
One of the crypto industry’s biggest legislative priorities suffered a significant defeat in Washington. Bitcoin fell on the news, briefly dropped below $75,000 and then reversed course. Within days, it had climbed above $85,000.
Markets often reveal their underlying strength by how they react to bad news. When an asset receives what should be a meaningful negative catalyst and quickly recovers, it suggests buyers may be waiting underneath the market.
Bitcoin still has a long way to go before reclaiming its record high, and one strong week doesn’t prove that another major bull market has begun. But if buyers continue stepping in despite regulatory uncertainty, the debate may soon move beyond whether the crypto winter is ending.
The bigger question will be whether Bitcoin’s next major cycle has already started.
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