Why is Bitcoin (BTC) price going up?

Three factors appear to be driving the move: concerns about the US dollar, renewed demand through spot Bitcoin exchange-traded funds (ETFs) and traders closing bearish positions.

Key takeaways

• Bitcoin (BTC) briefly rose above $81,000 on August 25, reaching its highest level since May.
• A weaker US dollar and concerns about inflation and government debt helped support demand for BTC.
• US spot Bitcoin ETFs recorded six consecutive trading days of net inflows through August 24.
• Short liquidations added momentum as traders betting against Bitcoin were forced to close their positions.

What is driving Bitcoin (BTC) price higher?

Bitcoin’s recent bounce is being driven by three key factors, from shifting US economic policy to renewed institutional demand.

1. US Treasury policy has weakened the dollar

The rally gained momentum after the US Treasury said  it would at least double the maximum size of certain long-term bond buybacks, from $2 billion to $4 billion per operation. Long-term yields and the US dollar fell after the announcement, while demand for risk assets increased.

Some investors saw the move as easing pressure in the bond market. Others viewed it as another reason to consider scarce assets like Bitcoin amid concerns about rising US debt and the dollar’s purchasing

Tim Sun, senior researcher at HashKey Group, said this could create “a relatively supportive macro backdrop” for assets such as Bitcoin and gold. 

“Bessent’s messaging has reinforced the market’s view that, at least through the midterm elections, US policymakers may have a lower tolerance for a further rise in long-term yields,” he added.

2. Spot Bitcoin ETFs are attracting fresh inflows

US spot Bitcoin ETFs recorded six consecutive trading days of net inflows through August 24, according to ETF flow data. Around $338 million entered the funds on August 24 alone, following $307m on August 21, and gargantuan $606m a day prior, taking August’s estimated inflows to $2.7 billion.

Consistent ETF demand can support BTC because fund providers buy Bitcoin to back new fund shares. However, some analysts warn to be cautious. 

“While it’s too early to call this a full-blown bull market, the move above US$80,000 and the ETF inflows look like a catch-up trade, since Bitcoin has been lagging other risk assets for a while,” said Min Jung, associate researcher at Presto Research, speaking to The Block.

3. Short liquidations added momentum

Bitcoin’s initial rise forced some traders who expected the price to fall to close their positions. Around US$3 billion in short crypto positions were squeezed during the rally, according to The Wall Street Journal. 

This is where market mechanics come into play. Closing short positions involves buying BTC, which fuels further momentum to the price rise.

Will Bitcoin (BTC) price continue to rise?

That depends on whether ETF inflows continue and the dollar remains under pressure. Regulatory developments and upcoming US Federal Reserve interest rate decisions could also influence demand.

Traders may watch whether BTC can hold above US$80,000 after its sharp weekly rise. A drop in ETF demand, stronger US dollar or change in interest-rate expectations could quickly reverse momentum.

Looking further ahead, Standard Chartered’s Geoffrey Kendrick has maintained a US$100,000 year-end target for Bitcoin (BTC). Following the latest rally, however, he said that forecast may now prove too low.

Kendrick attributed the rise mainly to short covering, supported by renewed inflows into US spot Bitcoin ETFs. If momentum continues, he believes Bitcoin could retest its all-time high of around US$126,000 before the end of the year.

FAQs about why is Bitcoin price rising today

Why is Bitcoin going up today?

Bitcoin (BTC) is rising due to a combination of a weaker US dollar, renewed inflows into spot Bitcoin ETFs and traders closing short positions. Together, these factors have increased demand for BTC. 

What are Bitcoin short liquidations?

Short liquidations happen when traders betting on Bitcoin’s (BTC) price falling are forced to close their positions as the price rises. Closing a short position typically involves buying BTC, which can add momentum to the rally.

Will Bitcoin continue to rise?

It depends on whether ETF inflows continue and the US dollar remains under pressure. Federal Reserve policy, regulation and broader investor sentiment could also affect BTC’s direction. Bitcoin (BTC) remains volatile, so the recent rise does not guarantee further gains.

Important information: ​​This informational content is written by Crypto.com and should not be considered as an investment recommendation or advice. Trading cryptocurrencies carries risks, such as price volatility and market risks. Before deciding to trade cryptocurrencies, consider your risk appetite.  All forecasting methods, scenarios, and examples are illustrative and subject to market uncertainty.