Bitcoin Rally Faces Uncertainty as Short Covering Fades
The Bitcoin rally may be losing steam as short covering fades, according to QCP Research. Strong demand for spot exchange-traded funds (ETFs) has been supporting the rally, but this trend is expected to slow down if new demand doesn't replace it.
QCP noted that open interest in BTC has fallen as its price advanced, while strong ETF inflows have provided additional support. However, these inflows are nearing the 95th percentile of the past year, indicating a potential peak in demand.
The market structure is also influenced by Strategy's recent financing activities. The company raised over $1.9 billion without adding to its Bitcoin holdings, leaving its BTC reserve unchanged at 840,447 coins. This suggests that Strategy is focusing on liquidity management rather than immediate accumulation.
Broader macroeconomic signals are also causing uncertainty in the market. The Federal Open Market Committee meeting minutes showed a 9-3 vote, with three officials preferring a 25-basis-point rate hike. Additionally, Treasury Secretary Scott Bessent announced plans to double the maximum size of long-term Treasury buybacks, which could support Bitcoin and gold amid ongoing fiscal concerns.