Bitcoin Surge Attributed to Spot Demand, Profit-Taking Risk Remains
Bitcoin's recent price surge to a multi-month high has left buyers from the past five months sitting on significant paper gains. The price peaked at $79,491 on August 21, and analysts at Bitfinex attribute this climb to spot demand and short covering, rather than fresh leverage.
The exchange's research desk noted that rallies built on borrowed money tend to unwind faster than those based on cash purchases, citing the 'squeeze-led' rally phenomenon. In contrast, the current price movement is driven by a combination of ETF demand, macro shifts, and low selling pressure, giving it a 'longer runway.'
Liquidity conditions have historically influenced BTC's price, with a 90% correlation between global liquidity indices and bitcoin prices since 2015. The U.S. Department of the Treasury's recent announcement to double the maximum size of its long-end liquidity support buybacks has also contributed to the increase in demand.
The analysts warned that the largest profit-taking wave of the year could materialize if the current surge lands, which would put pressure on the rally. Additionally, rising real yields and strain from long-dated bonds remain risks to the market.