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The price of Bitcoin (BTC) has increased today, climbing 5% with a significant upward candle that propelled the price to a two-week peak above $28,000 following the support of U.S. Court of Appeals Circuit Judge Neomi Rao for Grayscale Bitcoin Trust (GBTC) in its litigation against the U.S. Securities and Exchange Commission (SEC).
This ruling enhances the recent surge in institutional interest in Bitcoin from firms such as BlackRock and Fidelity Investments, both of which are set to receive updates regarding their BTC spot ETFs on September 2.
Bitcoin price. Source: TradingView
Let’s examine the factors contributing to the rise in Bitcoin’s price today.
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Institutional interest ignites a Bitcoin surge
The rally in Bitcoin’s price commenced on August 29 after Judge Rao overturned the SEC’s decision to reject the GBTC spot ETF due to “fraud” concerns. This ruling follows the company’s appeal to the SEC regarding the legitimacy of Bitcoin futures on June 30, 2022. Although the order does not sanction the spot ETF, Judge Rao stated,
“Grayscale’s petition for review be granted and the Commission’s order be vacated, in accordance with the opinion of the court.”
The judge’s decision to overturn the SEC’s denial of the Grayscale ETF has also positively impacted the Grayscale ETF, with the discount nearing 2023 highs below 25%.
Grayscale holdings. Coinglass
To date, the SEC has not approved any spot Bitcoin ETF, despite multiple applicants including BlackRock, Fidelity, Cathie Wood’s ARK, and 21Shares, which has sought approval three times.
BlackRock, the largest asset manager globally with over $8.5 trillion in assets under management, will also use Coinbase for the custody of the BTC in the trust as per the filing with the SEC. Starting in September, the SEC has several ETF decisions to approve, deny, or postpone.
ETF tracker. Source: Bloomberg
Decreased exchange BTC supply
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Alongside the increase in Bitcoin’s price on August 29, the BTC supply on exchanges has fallen to its lowest level since January 2018.
BTC balance on exchanges. Source: Glassnode
The market interprets the withdrawal of coins from crypto exchanges as a bullish indicator, as traders typically withdraw their BTC when they intend to hold it in self-custody for the long term.
Notably, on-chain data indicates that exchanges have been losing Bitcoin since May 18, 2023. This suggests that a significant number of Bitcoin investors are preparing for a BTC price increase even amid the prolonged bear market trend of 2023.
Bitcoin exchange net position change. Source: Glassnode
Liquidations may be driving Bitcoin price higher
As Bitcoin continues to exit exchanges, liquidations are experiencing less buffer, resulting in increased volatility. In the past 24 hours alone, over $46.5 million in BTC shorts have been liquidated, with more than $100 million in shorts liquidated across the crypto market.
Bitcoin liquidation heat map. Source: Coinglass
Despite the ongoing losses for short-sellers, 48% of the futures market remains short on Bitcoin price. With such a high proportion still skewed towards short positions, a potential opportunity for a short-squeeze could lead to further increases in Bitcoin’s price.
Bitcoin short vs. long ratio. Source: Coinglass
Related: BTC price jumps to 2-week highs on Grayscale vs. SEC Bitcoin ETF win
While Bitcoin’s price is exhibiting some bullish momentum in the short term following the Grayscale ruling and short liquidations, the Bitcoin Fear & Greed Index indicates that the market remains fearful, having decreased by over 13 points compared to the previous month.
Bitcoin Fear & Greed Index. Source: Alternative.me
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
