Key Points
- Bitcoin’s price surge was driven by a rise in short liquidations and strong inflows into spot exchange-traded funds.
- Political speculation and potential policy shifts in the U.S. are influencing investor sentiment.
Bitcoin’s recent ascent towards a two-month peak of $69,000 can be attributed to a significant increase in short liquidations and robust inflows into spot exchange-traded funds (ETFs).
As of the time of reporting, Bitcoin (BTC) was being traded at about $67,739, marking a 0.6% increase over the past day. The digital currency’s market cap is around $1.33 trillion, propelled by a daily trading volume nearing $30 billion.
Short Liquidations and ETF Inflows Fuel Price Rally
According to data from Coinglass, short liquidations have been instrumental in driving Bitcoin’s recent price surge. In the last 24 hours, Bitcoin short liquidations amounted to $17.91 million, exceeding the $11.8 million in long liquidations. This change illustrates a common market trend where forced short position coverings increase demand, pushing up Bitcoin’s price and generating more buying pressure.
Alongside market-triggered liquidations, Bitcoin ETFs based in the U.S. have seen substantial inflows. Over the previous week, these ETFs reported five straight days of net inflows, totaling over $2.12 billion. This trend continued into the beginning of this week with an additional $294.29 million in new inflows.
Spot Bitcoin ETFs Experience Significant Inflows
On October 24, SoSoValue data revealed that spot Bitcoin ETFs saw net inflows of $188.11 million, led by BlackRock’s IBIT ETF, which reported an inflow of $165.54 million. This marks the ninth day in a row of inflows into BlackRock’s ETF, which has collected nearly $2 billion during this period.
Conversely, Bitwise’s BITB ETF reported $29.63 million in inflows, even after experiencing a $25.2 million outflow the day before. Grayscale’s GBTC ETF countered this trend with $7.05 million in outflows, continuing a pattern that has seen over $20 billion exit the fund since its inception.
Since the first spot Bitcoin ETFs were launched in January, the 12 products currently available have garnered $21.53 billion in net inflows. Bloomberg ETF analyst Eric Balchunas has referred to this as “the most difficult metric” to achieve in the ETF landscape, emphasizing the uniqueness of this feat. He pointed out that gold ETFs took five years to reach the same figure, underscoring the fast-growing institutional interest in Bitcoin investment.
Political Factors and Policy Changes Impacting Investor Sentiment
In addition to immediate market activity, the political environment in the U.S. is also shaping investor sentiment. Speculation about a potential victory for Donald Trump in the forthcoming presidential election is fueling optimism among Bitcoin investors. They believe a pro-crypto administration would likely promote blockchain innovation and ease regulatory hurdles.
The former president’s policy position, which advocates for a favorable regulatory climate for blockchain and potentially replacing SEC Chair Gary Gensler, aligns with many institutional investors’ interests in less regulatory oversight. This potential shift is giving an extra boost to Bitcoin’s price momentum, as it could lead to a regulatory environment conducive to cryptocurrency growth.