Bitcoin Soars 2.9% as Spot ETF Inflows Propel Price to $71,166 High on Binance

• Bitcoin experienced a notable 2.9% surge over the past 24 hours, with its price reaching $71,166 on Binance, the highest since May 21, largely driven by inflows into US spot Bitcoin ETFs.
• The significant inflows into these ETFs include a record-breaking $886.6 million, led by major players such as Fidelity and BlackRock.
• “Fidelity not messing around, big-time flows all around today for The Ten, nearly $1b in total. Second best day ever, since Mid-March,” said Eric Balchunas, a Bloomberg ETF analyst.

Bitcoin surpasses $71k fueled by robust ETF inflows, marking a significant price movement since May. Discover the key drivers behind this rally in our detailed analysis.

What’s Driving Bitcoin’s Price Increase?

The recent surge in Bitcoin’s price is largely attributed to unprecedented inflows into US spot Bitcoin ETFs. The sector reported net inflows for the 16th consecutive day, climaxing with $886.6 million in a single day. Fidelity’s record-breaking $378.7 million led this charge, followed closely by BlackRock with $274.4 million in ETF investments. Other notable contributions included Ark with $138.7 million, Bitwise at $61 million, and Grayscale Bitcoin and VanEck Bitcoin Trusts with $28.2 million and $4 million respectively.

Analyst Insights and Market Reactions

Eric Balchunas, a notable Bloomberg ETF analyst, provided insights into these substantial inflows, highlighting the significant momentum in the ETF market. He stated, “Fidelity not messing around, big-time flows all around today for The Ten, nearly $1b in total. Second best day ever, since Mid-March. $3.3b in past 4wks, net YTD at $15b (which was top end of our 12mo est). The ‘third wave’ is turning into a tidal wave.”

However, Byzantine General, a renowned crypto analyst, pointed out that the price surge could have been even more significant if not for the substantial passive supply in spot exchanges. This passive supply provided a form of resistance, moderating the impact of the massive ETF inflows on Bitcoin’s price.

Potential for a Short Squeeze

Despite the positive dynamics, the liquidation of short positions in the BTC futures market has been minimal, with only $27.58 million in shorts liquidated in the past 24 hours, according to Coinglass data. Renowned on-chain analyst Willy Woo emphasized that the continued rise could precipitate a significant short squeeze, potentially triggering a cascade of liquidations. Woo remarked, “Tapping 72k is the fuse that’s set to start a liquidation cascade. $1.5b of short positions ready to be liquidated all the way up to $75k and a new all time high.”

Conclusion

In summary, Bitcoin’s recent price surge to over $71,000 is primarily driven by robust inflows into US spot Bitcoin ETFs, reflecting heightened investor interest and confidence. While substantial passive supply in spot exchanges has tempered the rise to some extent, the potential for a significant short squeeze looms if prices continue to ascend. Investors should stay vigilant and watch for these key dynamics as the market evolves.