Bitcoin touched $72,408 on Thursday, its highest level since June, after gaining nearly 15% since Monday and forcing the largest liquidation of short positions on the asset since at least 2021. Analysts point to Treasury bond buybacks, spot ETF inflows and forced short covering as the drivers, but they disagree on whether fresh buying can keep the rally going.
Bitcoin broke above $72,000 on Thursday, its highest price since June, touching an intraday high of $72,408 before easing to trade near $71,423. The move followed a gain of nearly 15% since Monday. More than $3 billion in crypto short positions were liquidated in the rally, the largest such liquidation on Bitcoin since at least 2021.
A Treasury move and a short squeeze
Julio Moreno, head of research at CryptoQuant, attributed the rally to the U.S. Treasury buying long-dated government bonds, which markets read as added liquidity, and to President Donald Trump suggesting the government could buy Bitcoin. Nansen senior research analyst Nicolai Sondergaard said the technical picture improved after Bitcoin reclaimed its 200-day moving average near $69,000.
However, Sondergaard warned that much of the move came from forced covering rather than new buying. According to Decrypt: "The largest risk is that this was a short-squeeze spike, not fresh sustained buying", he said, adding that thin follow-through could reverse the move quickly.
ETF inflows and a bottom call
Spot Bitcoin ETFs pulled in $517 million on Wednesday, their largest single-day inflow since May. BlackRock's IBIT alone took in $284.7 million of that total, according to U.Today.
Bitwise research analyst Ishmael Asad called the rally the strongest sign yet that Bitcoin has bottomed, pointing to the Treasury's bond buybacks and this week's White House crypto summit as catalysts. Coinbase CEO Brian Armstrong said on Aug. 20 that the crypto market is likely at the starting point of the next bull market. He cited the Senate's scheduled Sep. 15 procedural vote on the Digital Asset Market Clarity Act as the market's next major catalyst.
Not everyone is convinced
CoinShares head of research James Butterfill said the rally is primarily a macro story rather than a crypto-specific one, driven by inflation and employment data that weakened expectations for further Federal Reserve tightening. He expects Bitcoin to trade within a range rather than break out, since accumulation by large holders is not yet at a scale that would support a sustained move.
Sources: Decrypt, crypto.news, U.Today
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