Bitcoin (BTC) is showing renewed strength after recovering more than 2% last week and moving back above the $65,000 level on Monday. The cryptocurrency has found support near its 200-week Simple Moving Average (SMA), while strong inflows into US spot Bitcoin exchange-traded funds (ETFs) point to improving institutional demand.
However, Bitcoin’s recovery remains vulnerable to broader macroeconomic and geopolitical risks. Ongoing tensions in the Middle East, concerns over oil prices and inflation, and the failure of the controversial Bitcoin Improvement Proposal (BIP) 110 soft fork could influence market sentiment in the days ahead.
Middle East tensions continue to weigh on risk assets
Investor sentiment remains cautious as geopolitical tensions continue to affect global markets.
The ongoing US-Iran conflict has entered a sensitive diplomatic phase, while military activity and uncertainty surrounding the Strait of Hormuz continue to put pressure on risk-sensitive assets, including Bitcoin.
Fresh attacks by Iran-backed Houthi militants on Saudi energy infrastructure on Sunday have also added upward pressure to crude oil prices. Higher oil prices could increase inflation concerns and strengthen expectations that the US Federal Reserve may need to raise interest rates at least once in 2026.
A higher-for-longer interest-rate environment could limit Bitcoin’s upside by reducing demand for riskier assets.
BIP-110 soft fork fails to gain miner support
Bitcoin’s controversial BIP-110 soft fork has failed to secure sufficient miner support after the proposed minority chain produced only two blocks at height 961,632.
The branch received just 2.53% of miner support, far below the 55% threshold required for activation.
BIP-110 proposed restricting non-financial data, including images, text and Ordinals-style inscriptions, from being added to the Bitcoin blockchain for one year. Supporters, including Bitcoin Knots creator Luke Dashjr, argued that these transactions could contribute to network congestion and higher fees.
Opponents, however, argued that the proposal could amount to censorship of legitimate Bitcoin transactions.
MicroStrategy executive chairman Michael Saylor commented on X that Bitcoin had operated as designed, noting that approximately 99.85% of the network’s hash power remained on the main Bitcoin chain. He added that the BIP-110 branch had mined only two blocks and had already fallen more than 80 blocks behind.
The failed attempt highlights the challenges of changing Bitcoin’s consensus rules without broad agreement among miners and the wider community.
Bitcoin ETFs point to stronger institutional demand
Despite the broader market uncertainty, institutional demand for Bitcoin appears to be improving.
Data from SoSoValue showed that US spot Bitcoin ETFs recorded approximately $853.54 million in net inflows last week, marking their strongest weekly inflow since mid-April.
If ETF inflows remain strong or accelerate, sustained institutional buying could provide additional support for Bitcoin’s recovery and help push prices higher.
Bitcoin technical outlook
Bitcoin is trading above $65,000 on Monday after gaining 2.09% last week. The cryptocurrency found support near its 200-week SMA at approximately $64,009, making this level an important technical zone for bulls.
A sustained hold above the 200-week SMA could strengthen the recovery. If Bitcoin closes above the immediate resistance around $65,520, corresponding to the 78.6% Fibonacci retracement level drawn from the August 2024 low of $49,000 to the October 2025 record high of $126,199, the next major upside target could be around $78,490.
Momentum indicators are also showing early signs of improvement. The weekly Relative Strength Index (RSI) was around 41 on Monday and is moving toward the neutral 50 level, suggesting that bearish momentum may be easing.
Meanwhile, the Moving Average Convergence Divergence (MACD) indicator remains in a bullish crossover that began in mid-July. Rising green histogram bars further support the improving technical outlook.
However, the recovery could weaken if Bitcoin fails to hold the 200-week SMA. A weekly close below $64,009 could expose BTC to further losses, with the next significant support zone near $60,000 along an ascending trendline connecting major lows since January 2023.
For now, Bitcoin’s ability to remain above $65,000—and more importantly, defend the $64,000 area—could determine whether the latest recovery develops into a broader bullish move or turns into another failed rebound.
