Key facts
- Bitcoin price surged past $87,000 on Friday, up 4% in 24 hours.
- Over $120 million in crypto shorts were liquidated in an hour on October 2.
- Nearly $90 million in Bitcoin short positions were forced closed.
- Spot Bitcoin ETFs saw $102.7 million in net inflows on October 1.
- Odds of a Fed rate hike in October fell to 26%.
Bitcoin's price surged past $87,000 on Friday, marking a 4% increase over the preceding 24 hours. This upward movement was significantly driven by the liquidation of leveraged short positions, with data from Coinglass indicating over $120 million in crypto shorts were forced closed within an hour on October 2, nearly $90 million of which were Bitcoin shorts. Derivatives traders targeting $90,000 levels and falling oil prices also contributed to triggering these liquidations.
The broader crypto market recovery was also supported by a shift in expectations regarding Federal Reserve monetary policy. Weaker-than-expected US PCE inflation data and signals from Fed leaders led to a sharp drop in the probability of an October rate hike, with markets now anticipating rates to remain steady. This easing of rate hike expectations contributed to a slight fall in the 10-year Treasury yield and a weaker US dollar index, typically bullish factors for Bitcoin.
On-chain data from Glassnode suggested a removal of sell walls above $85,000, indicating reduced selling pressure. Analysts from 10x Research and BIT, along with trader Cheds Trading, expressed optimism for Q4, citing bullish technical patterns and an improving macro outlook. Furthermore, spot Bitcoin ETFs saw a return to net inflows, with $102.7 million added on October 1, led by BlackRock's IBIT. These inflows, coupled with cumulative ETF flows of nearly $57.7 billion since launch, are expected to provide sustained demand, according to Citi Group.
In regulatory news, the US Securities and Exchange Commission (SEC) proposed new rules for the custody of crypto assets by registered investment advisers and regulated funds. SEC Chair Paul Atkins' statement highlighting Bitcoin's growth from a niche curiosity to a multi-trillion-dollar asset class was also seen as a positive catalyst.