Bitcoin Surges Above $81,000 as Dollar Weakens and Institutional Demand Picks Up

The price of Bitcoin (BTC) has surged above $81,000, its highest level since May. Three key factors are driving this upward momentum.

Firstly, concerns about the US dollar's purchasing power and inflation have led to a shift in economic policy. The US Treasury's decision to increase long-term bond buybacks from $2 billion to $4 billion has weakened the dollar and increased demand for risk assets like Bitcoin.

The second factor is renewed institutional demand through spot Bitcoin exchange-traded funds (ETFs). These ETFs have recorded six consecutive trading days of net inflows, with around $338 million entering the funds on August 24 alone. This influx of capital supports BTC's price as fund providers buy Bitcoin to back new shares.

Lastly, short liquidations have added momentum to the rally. As traders who expected a price drop were forced to close their positions, around $3 billion in short crypto positions were squeezed. Closing these positions involves buying BTC, which fuels further price growth.