Brief Overview
-
Inflows into Bitcoin ETFs reached $1.7 billion over a span of two days, coupled with $300 million from forced short liquidations that contributed to a crypto surge exceeding 10% last week.
-
The selloff on September 24, which wiped out much of the week’s crypto gains, was triggered by a 5-year Treasury yield approaching 5%, a level not seen since 2007.
-
For Bitcoin to avoid validating September 23 as its peak, it needs to remain above $83,600; closing over $87,400 would indicate a resumption of the rally.
-
Constructing a portfolio and effectively managing retirement income are distinct skills rarely addressed in education. This issue is tackled in The Definitive Guide to Retirement Income, available for free today. Learn more. (Sponsor)
Bitcoin (CRYPTO:BTC), XRP (CRYPTO:XRP), and Solana (CRYPTO:SOL) all surged over 10% in the past week. However, they experienced a decline on September 24, with XRP decreasing by 6.9% and both Bitcoin and Solana dropping approximately 2%. By September 25, they rebounded, with Bitcoin priced at $84,403, XRP at $1.55, and Solana at $117. This raises the question: Is September 23 the maximum for Bitcoin, XRP, and Solana?
Significant ETF Inflows and Forced Short Closures Boosted Market Momentum Leading to September 23
Starting off strong, the week of September 23 was largely supported by Bitcoin achieving its first weekly close above the 50-week moving average in 45 weeks—an essential indicator for many traders to gauge market direction.
A notable aspect of the recent surge was the liquidation of short trades; exchanges enforced the closure of around $300 million in short positions within a single hour on September 21. Generally, a short position benefits from declining prices, so closing them necessitates purchasing the asset back, driving the price upwards until the shorts are eliminated.
Institutional investments also significantly impacted the market. U.S. spot Bitcoin ETFs garnered nearly $999 million on September 21 and an additional $715 million on September 22, according to SoSoValue. Despite the downturn on September 24, XRP rose by 15.8% throughout the week, Solana increased by 15.5%, and Bitcoin observed a 10.4% rise.
The Near-5% Treasury Yield Led to a Downturn on September 24
The decline on September 24 was closely linked to the bond market as the 5-year Treasury yield approached 5% on September 23, escalating from about 4.6% at the start of the month—a level not reached since 2007. This rise in Treasury yields encourages investors to seek better potential returns from cryptocurrencies compared to government bonds.
On that particular day, Bitcoin’s value fell from around $84,600 to approximately $83,600, while XRP dipped below $1.50. Additionally, the forced liquidations of long positions intensified the downward pressure, resulting in a lower price point.
