Bitcoin experienced a significant increase, rising from a low of $62,050 on Sunday to a peak of $66,500 on Monday evening. On Tuesday, BTC price is correcting slightly below this key resistance level but hovering above $65,000. Several critical factors contributed to the rally, including a small squeeze coinciding with the upcoming US election, strong demand in the Bitcoin spot market, and substantial inflows into US spot Bitcoin exchange-traded funds (ETFs).
#1 Short Squeeze and electoral influence in the US
Yesterday’s price increase can be partially attributed to the liquidation of leveraged short positions. Singapore-based trading firm QCP Capital writes in its latest investor note that nearly $80 million in leveraged short positions in Bitcoin and Ethereum were liquidated, applying upward pressure on the market. While some speculate that the postponement of Mt. Gox’s repayment deadline to October 2025 played a role, this news was already published on Friday, suggesting that other factors were at play during Monday’s rally.
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“While there could be many factors that could explain today’s movement, it is quite an interesting time if we look at historical price action. It’s mid-October and just three weeks away from the US elections,” notes QCP Capital. In 2016 and 2020, Bitcoin remained in a narrow trading range for months before beginning a significant recovery approximately three weeks before the US elections Day. In 2016, the price of Bitcoin doubled from $600 in the first week of January after the election. Similarly, in 2020, it rose from $11,000 to a high of $42,000 in January.
This year, October – often referred to as “To the top”Due to its historically strong performance – it has been dismal, with Bitcoin up just 1.2% compared to an average of 21%. The current recovery, which comes three weeks before the US elections, suggests that history may be repeating itself, potentially leading to further price appreciation as investor optimism increases.
#2 Strong demand for Bitcoin
For the first time since mid-2023, Bitcoin buy orders are matching sell orders on spot market order books on exchanges. Ki Young Ju, founder and CEO of CryptoQuant, highlighted this development via X: “Bitcoin buy walls on all exchanges are now strong enough to neutralize sell walls.”
This change marks a significant change in relation to the trend observed since May 2021. “Data from the last cycle (2020-2022). It is the accumulated difference between the quoted buy and sell volumes. Since May 2021, sell walls have been consistently thicker than buy walls until the end of the cycle,” Young Ju shared.
#3: Increase in Spot Bitcoin ETF Flows
Monday witnessed one of the highest Bitcoins ETF Inflows On record, totaling $555.9 million – the biggest day of net inflow since June 3rd. This substantial capital inflow was distributed among several large asset managers. BlackRock received $79.5 million, Fidelity attracted $239.3 million, Bitwise accumulated $100.2 million, Ark Invest recorded inflows of $69.8 million, and Grayscale Bitcoin Trust (GBTC) recorded inflows of US$37.8 million.
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Nate Geraci, president of The ETF Store and host of the ETF Prime podcast, commented about these inflows via X: “Monster day for spot BTC ETFs… $550M inflows. Now approaching *$20 billion* net inflows in 10 months. Just ridiculous and blows all pre-release demand estimates. This is NOT “degen retail” $$$ IMO. It’s consultants and institutional investors who continue to adopt slowly.”
At press time, BTC traded at $65,750.
Featured image created with DALL.E, chart from TradingView.com