Bitcoin nears $88,000 as short sellers face pressure
Bitcoin is trading near $88,000 as of October 5, with strong buying interest pushing it up 1% in 24 hours and 4% over the past week. However, it remains about 1.5% below its September 21 high of $87,397. This rally is different from previous ones due to a significant cluster of leveraged short positions around $88,000 and another larger group near $90,000.
September saw substantial activity in spot Bitcoin ETFs, with inflows reaching $2.65 billion for the month. On September 21, Bitcoin surged from $80,837 to $87,397 as roughly $750 million in short positions were liquidated, accompanied by a $715 million inflow into spot Bitcoin ETFs. Despite this strong momentum, the rally faded, and Bitcoin fell below $85,000 by September 25.
The cryptocurrency is once again testing the $87,000 level, with a failed attempt on October 3 resulting in about $478 million in leveraged positions being liquidated across the crypto market. To achieve a sustained breakout, Bitcoin needs to reclaim and hold above $87,400 on a daily or weekly closing basis.
If Bitcoin can move past the $88,000 and $90,000 resistance levels, it could potentially reach between $90,000 and $93,000. This upside potential is supported by easing Treasury yields, positive inflation data, and a drop in Federal Reserve rate-hike odds to roughly 23%. Continued inflows into spot Bitcoin ETFs could further bolster this rally.