The price of Bitcoin has exceeded $71,000 today. Over the past five days, Bitcoin’s price has increased by over 8.5%, from $65,600 to $71,118 on October 29. In the last 24 hours alone, the price of BTC has increased by 3.8%. This upward trend can be attributed to four key factors:

#1 Bitcoin ETFs attract huge inflows

The keen augment in the price of Bitcoin is closely related to the significant inflow of funds into Bitcoin Exchange-Traded Funds (ETFs). Yesterday we witnessed huge flows of ETF funds with a total value of $479.4 million. The largest inflow of funds was BlackRock with $315.2 million, followed by Fidelity with $44.1 million, Ark with $59.8 million and Bitwise with $38.7 million. These significant investments coincided with the price of Bitcoin rising from $68,000 to over $71,000.

Leading network analyst James “Checkmate” Check highlighted the discrepancy between Bitcoin ETF inflows and CME Open Interest. He excellent “We have a mismatch between Bitcoin ETF inflows and CME open interest. The inflow of ETF funds is clearly growing, interest in CME Open is growing, but not so large outflows from GBTC are also minimal. We are seeing truly directional ETF inflows, less cash and carry.”

The divergence suggests that investors prefer direct exposure to Bitcoin through ETFs rather than engaging in cash and carry transactions involving futures contracts. The carry trade strategy in the context of US spot Bitcoin ETFs and CME futures is to buy the ETF (track the Bitcoin spot price) and simultaneously tiny the CME Bitcoin futures.

This approach aims to take advantage of price differentials when futures contracts are traded at a premium to the spot price (contango). The noteworthy shift towards ETFs points to bullish sentiment among investors who expect prices to continue to appreciate.

#2 “Trading Trump”

Political events also influence Bitcoin’s recent surge. QCP Capital based in Singapore commented on the impact of former President Donald Trump’s interview on the Joe Rogan Experience podcast, which has garnered over 32 million views and pushed his Polymarket shares above 66%. Despite “crypto” being touted as a “Trump trade,” Bitcoin’s correlation with Trump’s potential election victory appears to be driving Bitcoin prices higher.

QCP Capital also noted that Bitcoin is only up 8% in this Uptober compared to an average of 21% in previous Octobers. They stated: “If spot continues at these levels, October will be Bitcoin’s fourth-worst performance in the last decade.” With total BTC futures interest across exchanges at $27 billion – approaching this year’s peak – a break above $70,000 could trigger novel all-time highs, especially if more leveraged long positions are added.

#3 Clutching shorts reinforces price increases

Market data indicates a significant tightening of tiny positions, which contributed to the augment in the price of Bitcoin. According to Coin65,622 traders were liquidated in the last 24 hours, and the total number of liquidations in the entire cryptocurrency market was $228.51 million. Of this amount, $169.47 million were short-term liquidations. In Bitcoin, tiny positions worth $83.61 million were liquidated. The largest single liquidation order was for Binance’s $18 million BTCUSDT pair.

The significant liquidation of tiny positions suggests that many traders were betting on prices falling and were forced to close their positions when the market moved against them. This massive unwinding of tiny positions can accelerate upward price movements as investors buy shares back into the market to cover their positions.

#4 Whales augment purchasing activity

Enormous investors, often called “whales,” are playing a key role in the current rally. CryptoQuant Mignolet analyst noticed that the Bitcoin rally continues, supported by activity on the Binance exchange. He highlighted that Binance whales began engaging significantly in the market two weeks ago during Asian trading hours, and the recent drops in the Coinbase Premium Gap (CPG) along with price increases are a “clear sign of intervention by Binance whales.”

Mignolet stressed that this should not be interpreted as a decline in demand in the US, but even stronger buying pressure from Binance. Demand for US Bitcoin spot ETFs has surged over the past two weeks, with net inflows of approximately 47,000 Bitcoins. Since most ETF products employ Coinbase, changes in CPG data are closely tied to ETF demand. He concluded: “Bitcoin’s current price is driven by Binance whales, with constant capital inflows from the US.”

At the time of publication, the BTC price was $71,340.

Featured image created with DALL.E, chart from TradingView.com