The sharp rise in the price of Bitcoin on the evening of August 19 led to a record closure of short positions: the total volume of liquidations has already exceeded $1.6 billion. The price increase is likely temporary, as investors are anticipating regulatory changes, as well as a signal from the US Federal Reserve regarding its intention to lower the key interest rate. Institutional demand for Bitcoin remains extremely low, as does retail trader activity, given its seasonal decline.
On the evening of August 19, the price of Bitcoin (BTC) began a rapid rise that continued through trading on August 20. According to Investing.com, the cryptocurrency's price soared by 10% over two days, with quotes managing to consolidate above $72K, setting new highs since early June. The sharp price increase was also noticeable in other cryptocurrencies: the price of Ether (ETH) rose by 17% over two days, surpassing $2.3K, its highest since mid-May. The price of Solana (SOL) increased by 12%, and Ripple (XRP) by 20%.
Investors significantly increased inflows into ETF funds.
According to Coinmarket.cap, on August 19 alone, they invested about $518 million, almost one and a half times more than the net inflow for the entire month of July. Experts note that such a reaction could have been prompted by the results of US President Donald Trump's meeting with representatives of the crypto industry, where the White House head reaffirmed his intention to push for the passage of the Clarity Act in the US Congress—a bill that aims to delineate cryptocurrency regulation among US agencies and make the industry more accessible to institutional investors.
However, the sharp price surge was caused not only by "hand purchases" but also by the mass closure of short positions, notes Alexander Peresichan, CEO of Technobit. According to CoinGlass, the volume of closed short positions in Bitcoin on August 19 alone exceeded a record $1.37 billion; on August 20, the liquidation volume exceeded $330 million. "Given that since the beginning of summer, the price of Bitcoin has fluctuated in the $57K–66K range, some participants bet on a further decline in quotes and placed short positions," explains Mr. Peresichan.
Considering this, the current rise in Bitcoin's price is more of a technical nature; this increase is likely to be temporary, as many investors will rush to lock in profits, market participants note. "A sharp closure of positions can temporarily lift the price, but it does not indicate increased interest in the asset," believes Igor Plotnikov, COO of Millpay. Strong institutional demand for Bitcoin is not currently observed. Despite the fact that the total net inflow into Bitcoin ETFs for July and the first two decades of August amounted to $1.8 billion, in June alone, the net outflow of funds exceeded a record $4 billion (see Kommersant, June 27). "Low inflow volumes confirm that large investors are returning to Bitcoin cautiously and are not ready to aggressively build up positions," points out Mr. Peresichan. Retail investor investments are also extremely low, including due to seasonal decline in activity, states Dmitry Tsarkov, Director of the Trading Operations Department at GBig Holdings.
In the coming months, the determining factor for cryptocurrency prices will be the US Senate's decision on the adoption of the Clarity Act, which the current US president is actively promoting, experts indicate.
"The bill should create a clear regulatory structure for the US crypto market, but its passage has stalled in the Senate due to political disagreements, so if it is not adopted in September, pressure on Bitcoin's price will increase," notes Oleg Abelev, Head of the Analytical Department at IC Rikom-Trust. "Investors are counting on the bill's passage, as without it, any current easing could be easily reversed by a future White House administration," notes Dmitry Tsarkov.
Large investors are also waiting for "a clearer position from the Fed on lowering the key interest rate," notes Mr. Plotnikov. Until then, the Bitcoin price will most likely "remain within the current price range, adjusted for position liquidations in the derivatives market," believes Mr. Tsarkov.
end-content
