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The price of bitcoin has surpassed the $71,000 mark today. In the last five days, the price of bitcoin has risen more than 8.5%, rising from $65,600 to $71,118 on October 29. In the last 24 hours alone, the price of btc has increased by 3.8%. This upward momentum can be attributed to four key factors:
#1 bitcoin ETFs Draw Massive Inflows
The rise in bitcoin price is closely related to significant inflows into bitcoin exchange-traded funds (ETFs). Yesterday there were massive ETF flows totaling $479.4 million. BlackRock led the entries with $315.2 million, followed by Fidelity with $44.1 million, Ark with $59.8 million and Bitwise with $38.7 million. These major investments coincided with bitcoin's price movement from $68,000 to over $71,000.
Leading on-chain analyst James “Checkmate” Check highlighted a divergence between bitcoin ETF inflows and CME open interest. He x.com/_Checkmatey_/status/1851018861665272101″ target=”_blank” rel=”nofollow”>noted “We have a divergence between bitcoin ETF inflows and CME open interest. ETF inflows are increasing significantly, CME open interest has increased but not as much, GBTC outflows are also minimal. “We are seeing true directional inflows into ETFs, and less into cash and carry trades.”
The divergence suggests that investors are favoring direct exposure to bitcoin through ETFs rather than engaging in cash and carry trades involving futures contracts. The carry trade strategy in the context of the US bitcoin Spot ETFs and CME Futures involves buying the ETF (tracking the bitcoin spot price) and simultaneously shorting the bitcoin futures in the CME.
This approach aims to capitalize on price differences when futures trade at a premium to the spot price (contango). The notable shift toward ETFs indicates bullish sentiment among investors, who anticipate further price appreciation.
#2 The “Trump trade”
Political events are also influencing bitcoin's recent rally. Singapore-based QCP Capital x.com/QCPgroup/status/1850866091700208040″ target=”_blank” rel=”nofollow”>commented on the impact of former President Donald Trump's interview on the Joe Rogan Experience podcast, which garnered over 32 million views and raised his Polymarket odds above 66%. Despite “cryptocurrencies” being touted as the “Trump trade,” bitcoin's correlation with Trump's potential election victory appears to be driving bitcoin's price rally.
QCP Capital also noted that bitcoin is up just 8% this “through October,” compared to an average of 21% in previous Octobers. They stated: “If spot remains at these levels, this October would mark bitcoin's fourth-worst performance in the last decade.” With total btc perpetual futures open interest across all exchanges standing at $27 billion, approaching this year's peak, a break above $70,000 could trigger new all-time highs, especially if more join long leveraged positions.
#3 Short squeeze amplifies price rise
Market data indicates a significant reduction in shorts contributing to the rise in bitcoin price. According glass coinIn the last 24 hours, 65,622 traders were liquidated, and total liquidations across the entire crypto market amounted to $228.51 million. Of these, $169.47 million were short liquidations. Specifically for bitcoin, $83.61 million in shorts were liquidated. The largest single liquidation order occurred on Binance's BTCUSDT pair, valued at $18 million.
The significant liquidation of short positions suggests that many traders were betting on a price decline and were forced to close their positions when the market moved against them. This massive short liquidation can accelerate bullish price movements as traders buy back into the market to cover their positions.
#4 Whales increase purchasing activity
Large-scale investors, often referred to as “whales,” are playing a critical role in the current rally. Mignolet, CryptoQuant analyst x.com/cryptoquant_com/status/1851038234177835293″ target=”_blank” rel=”nofollow”>observed that bitcoin's rally continues, led by activity on the Binance exchange. He noted that Binance whales began participating significantly in the market two weeks ago during Asian trading hours, and the recent drops in the Coinbase (CPG) premium gap along with price increases are “a clear sign of intervention.” of Binance whales”.
Mignolet emphasized that this should not be interpreted as a decrease in US demand, but rather as even greater buying pressure from Binance. Over the past two weeks, demand for US bitcoin spot ETFs has increased, with a net inflow of approximately 47,000 bitcoin. Since most ETF products use Coinbase, movements in CPG data are closely related to ETF demand. He concluded: “bitcoin's current price is being driven by Binance whales, with sustained inflows of US capital.”
At the time of publication, btc was trading at $71,340.
Featured image created with DALL.E, chart from TradingView.com
