Bitcoin (BTC) is extending its rally surging past $58,803.18 today, marking a 1.38% intraday gain. This rally comes just days after the cryptocurrency hit a five-month low. This rebound comes despite the recent sell-off of Bitcoins by the German government.

Several factors are propelling this resurgence. One key driver is the near-liquidation of the German government’s Bitcoin holdings after majority sell-off. Having sold over $2.5 billion worth of BTC since mid-June, they now hold approximately 9,100 BTC. Interestingly, this selling spree coincided with a 12.70% price dip for Bitcoin. However, the past eight days have seen a remarkable recovery of over 10%.

Institutional Investors Scoop Up Bitcoin 

While the German government shed its Bitcoin stash, institutional investors appear to have been accumulating the digital asset on the cheap. Analyst Cauê Oliveira, citing data from CryptoQuant, points to a significant increase in wallet balances holding between 1,000 and 10,000 BTC, particularly during the German sell-off. These “whales” are estimated to have scooped up over 10,000 BTC, worth $5.7 billion, during Bitcoin’s recent price decline. This suggests they were actively buying the dip when prices fell below $60,000.

Oliveira highlights the contrasting behavior between new and institutional investors: “While many novice investors panicked last week, especially those who bought in the last three months, institutional players have been accumulating at the highest rate since March.” This on-chain data suggests Bitcoin may have bottomed out near its recent lows of $56,700.

Weakening US Dollar Fuels Bitcoin Rally

Adding fuel to the Bitcoin rally is a weakening US dollar. The US Dollar Index (DXY), which measures the dollar’s strength against a basket of major currencies, has dipped 0.90% in the past week, reaching its lowest level in about five weeks at around 104. This decline is attributed to rising bets among bond traders that the Federal Reserve will cut interest rates as early as September.

Bitcoin Price Rebounds Despite Recent Concerns

Furthermore, the ballooning US government deficit, reaching $1.27 trillion year-to-date by June, is putting further downward pressure on the dollar. Lower interest rates and a higher deficit can weaken a currency as they raise concerns about the government’s ability to manage its finances, potentially leading to inflation and a devaluation of the dollar. This often prompts investors to seek alternative assets like stocks and cryptocurrencies, which can benefit from a weaker dollar.

Bitcoin’s renewed strength comes despite recent anxieties surrounding the German sell-off and the ongoing Mt. Gox exchange hack repayment process, which involves distributing over 140,000 BTC to creditors.

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