Bitcoin (BTC) rallied above $66,000 in early Asian trading on Wednesday, extending its recent gains after a volatile few weeks.

At the time of writing, the Bitcoin price has retraced slightly. The leading cryptocurrency is currently trading around $65,456.03 after having gained 3.8% in the last 24 hours, according to Coingecko data.

This comes after a period of uncertainty in July, when BTC dropped as low as $53,500 amid concerns surrounding repayments from defunct exchange Mt. Gox.

This surge is part of a broader upward trend in the crypto market, with Ethereum also seeing gains, trading up 3.2% at $3,470.

One key factor contributing to the positive momentum was the complete liquidation of Bitcoin holdings by wallets linked to the German state of Saxony. Or rather, the fact that it's all done.

Eugene Cheung, VP and Head of Institutions at Bybit wrote in a note shared with Decrypt now that the German government has exhausted its BTC selling, the market is likely to see near-term relief and renewed demand flowing in to support the market and market profitability stays strong.

He noted that most of the coin supply is still held at a favorable cost, below the current spot price.

“However, the looming overhang of Mt. Gox coins contributes to a sense of caution in the market, though the chance that this sell-pressure is already priced in is high,” Cheung said. “After all, the distribution of the Mt Gox bankruptcy estate has been closely followed by the industry for years and is probably the most telegraphed sell-event in BTC history.”

Additionally, the crypto market has found renewed optimism in the pro-Bitcoin stance of Republican presidential candidate Donald Trump.

In a surprising move, Trump announced his selection of crypto-friendly Senator J.D. Vance as his vice-presidential running mate via a post on Truth Social, which he launched after being banned from Twitter in January 2021 following the events at the U.S. Capitol.

Although Elon Musk reinstated Trump's Twitter account after acquiring the platform, Trump has consistently refused to return to Twitter, preferring to use Truth Social as his primary means of communication with supporters.

Trump’s post quickly gained traction across various social media platforms on Monday,  further bolstering the crypto community's outlook.

The surge in Bitcoin's value coincides with increasing inflows into Bitcoin spot ETFs.

On July 16 alone, U.S. spot Bitcoin ETFs saw a total net inflow of $423 million, marking the eighth consecutive day of net inflows, according to data from SoSo Value.

BlackRock's iShares Bitcoin Trust (NASDAQ: IBIT) led the charge with a single-day inflow of $260 million, while the Fidelity Wise Origin Bitcoin Fund (FBTC) attracted $61.053 million.

Valentin Fournier, an analyst at BRN said in a note shared with Decrypt that Mt. Gox on Monday moved $6 billion out of its $9 billion BTC holdings from its main wallet ahead of beginning repayments. Roughly $2.8 billion went to a cold wallet and another $3 billion was transferred to Kraken.

“This resulted in a brief dip to $62,400, followed by a strong rebound,” Fournier wrote. “This shows that Bitcoin's momentum is resilient and that it could extend to higher levels."

The BRN analyst also noted the increasing inflows into Bitcoin ETFs, with more than $1 billion in three days and $1.9 billion in the past seven days.

"As Bitcoin keeps breaking resistance and is not in overbought positions yet, we believe it will keep going, potentially retesting 70,000 by next Tuesday," Fournier predicted.

Edited by Stacy Elliott.