Bitcoin Rally Fueled by Short Covering, Not Fresh Leverage

Bitcoin's recent rally is not due to fresh leverage, but rather short covering, according to QCP Capital. The BTC price has gained almost 23% over the past month and stabilized above $77,700 after a minor 1.4% surge on Thursday.

The firm believes that the Federal Reserve's stance on maintaining a 2% PCE inflation target is still in place, with headline PCE remaining at 3.7%. This suggests that there is little support for near-term rate cuts.

QCP also pointed out that Treasury long-end buybacks were doubled to $4 billion quarterly, but this represents only 0.013% of the $31.5 trillion Treasury market, indicating liquidity support rather than a policy pivot.

NoName, an analyst, is watching Bitcoin's next major move closely and believes it could depend on whether the price can close above $83,000. A daily close above this level would be needed to confirm a new uptrend, while a rejection at $83,000 followed by a break below $74,000 could send the crypto asset toward $50,000-$55,000.