If the rise is mainly driven by short covering and high leverage long positions, then the faster it rises, the more concentrated the subsequent liquidation risk will be.
Written by: Daii
Let me first say the most important point:
Bitcoin breaking above $84,000 is not enough to prove that the bull market has resumed. It is not even enough to prove that real spot buying is continuously entering the market.
1. What really deserves attention is not how much it has risen, but who pushed the price up
A rally can be driven by at least three completely different engines.
One is a continuous increase in spot buying. Buyers directly use money to buy coins and either take them away or hold them long-term. This kind of market is usually more solid.
One is leveraged long positions in derivatives. Prices rise quickly, and open contracts, funding rates, and futures basis also inflate simultaneously. This kind of market looks fierce, but the foundation may be very thin.
Another is short covering. After prices break through key areas, short sellers' stop losses and forced liquidations turn into passive buy orders. These passive buy orders continue to push prices higher, triggering the next batch of shorts to exit. Very steep rises can form in a short period.
These three types of movements may look identical on a K-line chart. However, the consequences are completely different.
The market data mentioned does not provide the spot trading volume, open interest in futures, funding rates, basis, liquidation volume, or net inflow data from exchanges. Relying solely on "a 4.22% rise in 24 hours" cannot distinguish which type of engine it is.
Therefore, interpreting the rise directly as "the market confirms the bull market" is insufficient evidence. Interpreting it directly as "massive short coverings occur above $80,000" is also insufficient evidence. Without the liquidation numbers that include the exchange range, contract range, data provider, and time window, it should not be stated as fact.
Professional judgment is not about giving each bullish candlestick a grand story.
Professional judgment is about first acknowledging: the current news lacks the data to establish a definitive story version.
2. $84,000 is not an anchor, just a position on the order book
Many people like to ask what Bitcoin is truly anchored to.
This line of questioning can easily lead one into a dead end. Bitcoin does not have future cash flows like stocks, nor does it have contractual interest like bonds. Its market price is formed by marginal transactions. Whoever is willing to trade at the next price level decides the quote at that moment.
This does not mean that prices are entirely irregular.
Liu and Tsyvinski’s research on cryptocurrency asset returns found that traditional stock, currency, and precious metal risk factors cannot sufficiently explain cryptocurrency asset returns; rather, the market’s own momentum and investor attention have more explanatory power. This conclusion does not imply that macro factors are useless. It indicates that mechanically translating Bitcoin into "digital gold," "high beta Nasdaq," or "anti-dollar assets" oversimplifies price formation.
In the same month, it can be influenced by U.S. dollar liquidity, pushed by ETF subscriptions, or experience reverse liquidations due to excessively unidirectional leverage positions.
The so-called "no fixed anchor is the greatest anchor" may sound catchy but is not suitable as an analytical framework. An explanation that cannot be falsified can explain any market condition, which is tantamount to explaining nothing.
A more useful approach is to break prices down into four layers: spot demand, regulated funding channels, derivatives positions, and available liquidity for transactions.
3. What ETFs change is the funding entrance, not the law of prices only rising
In January 2024, the U.S. Securities and Exchange Commission approved multiple spot Bitcoin exchange-traded products to be listed for trading. The significance of this is not that Bitcoin has received a "safe asset certification." The SEC has deliberately distinguished between product listing approval and recognition of Bitcoin itself in its approval order and accompanying statement.
The real change is in market structure.
A group of investors who were previously unwilling or unable to directly manage private keys, connect to crypto exchanges, or handle on-chain transfers have gained exposure to Bitcoin prices within their securities accounts. Asset management institutions also have a familiar path for subscriptions, redemptions, and custodial processes.
This means that when analyzing the market around $84,000, ETF net subscriptions should indeed be included in the watchlist. However, the boundary of evidence must be maintained: the title does not provide the net flow of funds corresponding to September 21, so this rise cannot be directly attributed to ETFs.
Even if it confirms there was a net inflow that day, one cannot simply equate the amount of net inflow with the capital needed for price increases. Market prices are determined by marginal liquidity. The thinner the order book, the easier it is for the same size of buy orders to push prices. Conversely, if market makers have sufficient inventory and there are concentrated sell orders, sizable purchases may only produce limited impact.
To determine whether ETFs are the main driver, one should at least simultaneously consider net subscriptions, price contributions during and outside U.S. trading hours, spot trading volume, and the depth of related markets. Missing one dimension reduces the conclusion.
4. Ethereum rising synchronously can only prove that risk preference has spread a little
The title also mentions that Ethereum rose 4.74% in 24 hours, slightly higher than Bitcoin.
This provides a clue: the market is not completely limited to Bitcoin's single trading pair. However, this is still far from indicating a "full altcoin season."
Both large-cap assets rising together could be due to common dollar liquidity or a synchronized increase in the same batch of risk accounts. To truly demonstrate improved market breadth, one needs to observe more layers: whether Bitcoin's share in total market capitalization has decreased, whether the rise of small to mid-cap assets is widespread, whether spot trading has expanded, and whether stablecoin supply and exchange balances support new purchasing power.
Relying solely on Ethereum outperforming Bitcoin by less than a percentage point in one day does not allow us to conclude that capital has fully spilled over.
Research indicates that cryptocurrency asset returns exhibit significant common factors. This is precisely why "two coins rising together" cannot be considered two independent pieces of evidence. They may simply be two displays of the same risk factor.
5. The next focus should be on four tables, not the slogan of $120,000
The first table isspot trading and market depth. An increase accompanied by amplified spot trading across multiple exchanges and sustained buy orders during pullbacks is more credible than sudden spikes on a single platform.
The second table isleverage positions. Rapid increases in open contracts,持续升高的资金费率，期货大幅升水，说明越来越多人借钱押在同一方向。CFTC长久以来提醒，虚拟货币市场波动剧烈，保证金交易会放大亏损，强制平仓可能发生得非常快。
The third table isETF net flows and their sustainability. A day of net inflow is an event. Continuous net subscriptions over multiple days and across products are closer to a trend. Also, distinguishing between newly added funds and migration between products is essential.
The fourth table ispost-rise price acceptance. A breakout is not merely hitting a certain integer. A breakout occurs when the price leaves the original range but still has real transactions willing to complete in a higher area. If the price quickly falls back to the original range, the so-called breakout is merely a liquidity sweep.
As for whether it will reach $120,000 again, existing materials are insufficient to provide a disciplined probability, let alone to say "definitely." Two phases of historical movement appearing similar do not mean the third phase must replicate them. Adjusting sample selection, start and end dates, and scales can create many attractive similar graphs.
The cheapest part of price forecasting is announcing a target level.
The most expensive part is explaining what evidence would make one wrong.
My judgment is very clear: $84,000 is worth paying attention to, but it is primarily a price movement that needs to be decomposed at present, not a bull market decree. If spot trading expands, ETF funds continue to flow in, and leverage does not simultaneously spiral out of control, the quality of the breakout will improve. If the rise is mainly driven by short covering and high leverage, then the faster it rises, the more concentrated the subsequent liquidation risk will be.
What I've addressed above is how to view this rise. A more challenging layer is identifying "true spot demand" from public data and the superficial buy orders caused by market makers' hedging; the two often look almost identical in the short term.
This order book has not been fully unturned yet, and my judgment will not be limited to an integer.
References
- Igor Makarov and Antoinette Schoar (2020), Trading and Arbitrage in Cryptocurrency Markets, Journal of Financial Economics
- Yukun Liu and Aleh Tsyvinski (2021), Risks and Returns of Cryptocurrency, Review of Financial Studies
- U.S. Securities and Exchange Commission (2024), Order Granting Accelerated Approval of Spot Bitcoin Exchange-Traded Products
- U.S. Commodity Futures Trading Commission, Customer Advisory: Understand the Risks of Virtual Currency Trading
Disclaimer: This article represents only the personal views of the author and does not represent the position and views of this platform. This article is for information sharing only and does not constitute any investment advice to anyone. Any disputes between users and authors are unrelated to this platform. If the articles or images on the webpage involve infringement, please provide relevant proof of rights and identity documents and send an email to support@aicoin.com. The relevant staff of this platform will conduct an investigation.