Bitcoin Surges Past Three-Month High as Record Short Liquidations Fuel Rally

Bitcoin's price has seen its best week in over three years, with a rally of more than 23% in the past seven days. The cryptocurrency crossed $78,000 on Friday morning, marking an over three-month high. According to Standard Chartered analyst Geoffrey Kendrick, this surge could lead to Bitcoin shooting past its record high of over $126,000 before the end of the year.

Kendrick's $100,000 year-end forecast may now be too low, he said in an email to clients, adding that 'an overshoot towards the all-time high before year-end may be possible' after October 6. The rally is largely driven by the liquidation of bearish positions, with record short liquidations seen this week.

Kendrick noted that the market has seen the largest liquidation of Bitcoin short positions on record, based on CoinGlass data going back to June 2021. This has added further momentum to the move higher, and fresh capital is increasingly being attracted to the market rather than solely relying on short covering.

The dynamic is emerging in the ETF market, with Bitcoin ETFs attracting roughly $1.5 billion in inflows so far this week. Kendrick described Bitcoin as a 'Giffen' good for long-term investors, where rising prices can encourage investors to buy more rather than wait for a pullback.