Three Factors Drive Bitcoin Price Above $81,000

The price of Bitcoin has risen above $81,000 for the first time since May, driven by three key factors. The first is a weaker US dollar due to concerns about inflation and government debt. The second is renewed demand through spot Bitcoin exchange-traded funds (ETFs), with six consecutive trading days of net inflows through August 24.

The third factor is short liquidations, where traders who bet against Bitcoin were forced to close their positions as the price rose. This added momentum to the rally, with around $3 billion in short crypto positions squeezed during the rise.

US Treasury policy has weakened the dollar by announcing it will at least double the maximum size of certain long-term bond buybacks. Some investors saw this as easing pressure in the bond market and increasing demand for risk assets like Bitcoin.