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Source: TradingView |
Several factors are contributing to this price increase:
Institutional Interest
The recent decision by Judge Neomi Rao to side with the Grayscale Bitcoin Trust in its case against the SEC has sparked renewed interest from institutional investors. Several large institutions, including BlackRock and Fidelity Investments, have filed for Bitcoin exchange-traded funds (ETFs). While the approval of spot BTC ETFs has been delayed, Franklin Templeton, a $1.5 trillion asset manager, filed an application for a spot Bitcoin ETF on September 12. This growing institutional interest is boosting market sentiment.
Reduced Bitcoin Supply on Exchanges
The supply of Bitcoin on exchanges has been steadily decreasing since May 1, 2023, and is currently below the peak reached earlier in the year.
Traders tend to withdraw their Bitcoin from exchanges when they intend to hold it in self-custody for the long term. This reduction in supply on exchanges is viewed as a bullish signal by the market.
Short Liquidations
Liquidations of Bitcoin short positions have had a notable impact on the price. Over the past 24 hours, more than $38.1 million worth of BTC shorts were liquidated, with a significant portion of these liquidations occurring within a 12-hour timeframe.
Despite these losses for short-sellers, 53% of the futures market remains short on Bitcoin. This high short ratio could potentially lead to a short squeeze, further driving up the Bitcoin price.
Despite these positive factors contributing to the price rally, the Bitcoin Fear and Greed Index still indicates that the market is in a state of fear, with a decrease of over 24 points compared to the previous month.
This suggests that there may still be uncertainty and caution among investors, even as the price shows short-term bullish momentum.