Why Bitcoin has risen so fast recently

Author: Anthony Pompliano, Founder of Professional Capital Management; Translated by AIMan@Jinse Finance

Bitcoin has experienced a historic rise recently. BTC has broken new highs and exceeded $120,000.

As our friends at Geiger Capital say: "The candlesticks are crazy. This is price discovery." That's exactly how price discovery works. The price of Bitcoin will be repriced higher and higher until the net new buyers are exhausted.

So how high can Bitcoin go during this price discovery process?

You can see from the chart that back in November 2024, Bitcoin went from $70,000 to $90,000 in just a few weeks after breaking out of its all-time high.

If Bitcoin also sees a similar 30% breakout, it would be priced at $140,000 in the next two weeks or so.

I am not predicting that Bitcoin will hit $140,000 anytime soon. I am simply showing you what it looked like the last time Bitcoin was in a similar price discovery phase.

This brings us to another question -

What caused Bitcoin to finally break out of its previous range between $100,000 and $110,000?

The answer may be a little complicated.

Reason 1: Bitcoin ETFs saw significant inflows in early July

Barchart pointed out that last Thursday was the second-highest day for overall inflows into Bitcoin ETFs.

Bitcoin ETFs saw an incredible one-day inflow of over $1.2 billion. It’s hard to explain how successful the launch of a Bitcoin ETF has been for Wall Street.

Bloomberg’s Eric Balchunas did his best to chart the dominance of BlackRock’s IBIT fund. Eric wrote: "Last night, the size of the IBIT fund exceeded the $80 billion mark, becoming the fastest ETF in history to break this mark, taking 374 days, which is about 5 times faster than the previous record ( VOO held, which took 1814 days). In addition, the size of the IBIT fund reached $83 billion and is currently ranked 21st among the world's largest ETFs."

Eric went on to explain the collective success of Bitcoin ETFs, saying: "Total assets of all spot Bitcoin ETFs also exceeded $140 billion for the first time." For a product that was launched about 18 months ago, these are amazing numbers.

At the end of every quarter, there is a lot of open interest selling future products… volatility is compressed. Bitcoin volatility is below 40, so I think once it expires, the selling pressure will decrease. ”

So you can’t ignore the importance of options expiration in the days leading up to Bitcoin’s breakout. But that’s not the whole story either.

Reason 3: A lot of shorts got squeezed

Jordi went on to explain that shorts had accumulated positions and got squeezed, which reinforced the price rally. “There was a lot of short positions accumulated in the $110,000 to $120,000 area, near the previous all-time high,” he told me.

It makes a lot more sense now. A series of events have come together. Inflows into Bitcoin ETFs are near all-time highs, Bitcoin options just expired, and shorts became so complacent that they were liquidated on the way up.

Bitcoin Is the New Lowest Yield, If You Can’t Beat It You’ve Got to Buy It

It doesn’t matter how high it goes in the short term. The professional investment community has finally realized that Bitcoin is not going away. These institutions and individuals will continue to push the price higher for years to come. There will be a lot of volatility along the way, including bear markets. But make no mistake — Wall Street is capitulating.

They are raising the white flag. No one wants to ignore, beat, or laugh at Bitcoin anymore. They all want to buy and hold it. If they can’t find a way to outperform Bitcoin, what else can they do? I've said it over and over again... Bitcoin is the new minimum yield. If you can't beat it, you have to buy it.

Wall Street is finally listening.