Bitcoin rally supported by spot demand as leverage stays subdued, Bitfinex warns
Bitcoin is extending a rally after a short squeeze, and Bitfinex analysts say it may “hold” because spot buying and U.S. ETF inflows are outpacing new leverage.
BTC rose about 23% over the past week to roughly $77,500 and hit an intraday high near $79,200. The initial breakout was squeeze-driven after BTC cleared ~$65,000 resistance and liquidation clusters around $67,000. More than $1B in short positions were liquidated within about an hour, with total short liquidations later approaching $1.79B (and bearish liquidations near ~$2.7B over 24 hours).
However, Bitfinex’s key evidence is derivatives vs. price behavior: during the breakout, Bitcoin gained roughly 10%–11%, while open interest increased only around 4%. Analysts argue the “shape” of the move suggests spot demand did most of the work, reducing the risk of another large liquidation wave from an overcrowded long market—unless traders add leverage after price rises.
They highlight a critical support zone at $68,000–$69,000, which aligns with recent holder cost basis and Bitcoin reclaiming its 200-day moving averages near $69,000 for the first time in about nine months. Traders are also urged to watch the Coinbase Premium as a U.S.-participation gauge.
Catalysts/risks: U.S. spot Bitcoin ETFs pulled in about $517M net on Aug. 19 and about $606M on Aug. 20 (two-session inflow above $1.1B). Macro tailwinds include larger U.S. Treasury buyback operations, but risks are rising yields and potential profit-taking as profitable BTC moves to exchanges.
For traders, the near-term playbook is clear: track BTC vs. $68K–$69K support and confirm whether ETF/spot demand continues while open interest stays restrained.
Bullish
Bitfinex’s bullish case is that Bitcoin’s recent jump was initially liquidation/short-squeeze driven, but the follow-through is being supported by spot demand rather than fresh leveraged longs. Open interest rising only ~4% while price gained ~10%–11% is a classic “less leverage, more spot” signature—often more durable than rallies that rely on leverage expanding in lockstep with price.
In prior market behavior, short-squeeze bursts can fade quickly once forced buyers complete unwinding. The differentiator here is continued ETF inflows and spot buying, which reduce the probability of another violent liquidation cascade. Still, Bitfinex flags that if traders add leverage after the move, the rally’s stability can deteriorate—so the key trading risk is a rebound in open interest.
Short-term: traders should treat $68K–$69K as the decision zone; a sustained hold would keep the market in a “spot-led” regime (supporting upside attempts, including momentum around the 200-day MA reclaim). A breakdown would shift the setup back toward loss-taking among recent buyers.
Long-term: improving ETF demand plus macro tailwinds (Treasury buybacks) can support a broader trend shift, but rising Treasury yields and potential profit-taking as exchange balances grow can cap upside or increase volatility. Net-net, the probability-weighted impact is bullish because spot/ETF support is currently outpacing leverage build-up.