Bitcoin Price Surge Driven by ETFs, Leverage on the Rise

Bitcoin's recent price surge to an eight-month high of $87,392 has been attributed to U.S. spot ETFs, which have seen about $1.7 billion in inflows over two days.

Wojciech Kaszycki, strategy adviser to BTCS S.A., a Warsaw-listed Bitcoin treasury company, says that looking at ETF inflows and futures open interest together gives a clearer picture of the rally than price alone.

Kaszycki notes that while cash buying supported the initial move, borrowed positions have started to accumulate on top of it. He believes that a move through $90,000 would meet selling pressure, as holders who bought Bitcoin between $90,000 and $110,000 last year may use a return to that range to sell near their purchase prices.

Kaszycki advises companies to avoid margin, perpetual futures, and borrowing against their Bitcoin on terms that can trigger a rapid demand for repayment. He suggests using options where the maximum loss is the premium paid instead of hedging with leveraged instruments.