In the cryptocurrency markets, Bitcoin’s ($BTC) recent surge from around $63,500 to over $80,000 is said to have been supported by strong spot demand rather than leveraged trading.
According to an assessment published by QCP Capital, Bitcoin’s current market structure appears healthier than previous speculative rallies. The company states that approximately $2.8 billion in net inflows occurred into spot Bitcoin ETFs during $BTC’s rise from $63,500.
In contrast, the amount of open positions in Bitcoin futures markets decreased from approximately 646,000 $BTC in mid-August to 588,000 $BTC. The fact that funding rates have remained at relatively low levels also indicates that the price increase is not driven by aggressively leveraged long positions.
QCP stated that these data show that spot purchases and the closing of short positions were particularly prominent in the rally. This could indicate a more sustainable market structure for Bitcoin due to the limited accumulation of excessive leverage.
On the macro front, the Fed and the US Treasury are being closely watched.
Despite the positive technical structure in the Bitcoin market, the macroeconomic outlook remains uncertain. While core PCE inflation in July remained at 3.3% year-on-year, markets are pricing in a 35% probability of the Federal Reserve raising interest rates by 25 basis points at its September meeting.
On the other hand, the expansion of the US Treasury’s repurchase program to support liquidity in long-term bonds is among the factors supporting risky assets.
The Treasury announced that, starting September 9th, it will increase the upper limit for per-repurchase operations of 10- to 30-year bonds from $2 billion to at least $4 billion. Following this announcement, long-term bond yields fell, the dollar index weakened, while gold and Bitcoin prices rose.
QCP also noted that Nvidia’s strong balance sheet contributed to risk appetite in global markets.
However, it is noted that the US Treasury’s bond repurchase program is not quantitative easing (QE). The program aims to improve liquidity conditions in the long-term bond market, not to directly determine bond yields, and does not create a QE-like expansion in central bank reserves.
According to QCP’s assessment, the key question for Bitcoin in the short term will be whether strong spot demand will continue.
*This is not investment advice.