Rally Fueled by ETFs and Short Covering

Bitcoin News: ETF Demand and Short Covering Power August Rally

Bitcoin (BTC)
Author
Ahmed Barakat
Author
Part of the Team Since
Aug 2025
About Author

Ahmed Barakat is a journalist and copywriter based in Georgia with a growing focus on blockchain technology, DeFi, AI, privacy, digital assets, and fintech innovation.

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Bitcoin rose above $80,000 today, reaching more than a three-month high as softer U.S. dollar news revived momentum in the crypto sector. The cryptocurrency was last trading at $80,300 after touching $81,200. It had risen 16% since the prior week.

The move has drawn attention to two forces behind the rally: demand through U.S. spot Bitcoin exchange-traded funds and the unwinding of bearish positions as prices climbed.

This month, the U.S. Treasury doubled its support for longer-dated government bonds, increasing its buyback program from $2 billion to $4 billion. The move does not directly expand the money supply, but it may put downward pressure on long-term yields and can be viewed by markets as having an easing-like effect.

The announcement helped revive discussion of the debasement trade, in which investors seek assets seen as protection against a weaker dollar, persistent deficits, and inflation. Bitcoin’s fixed supply of 21 million coins is part of its appeal to investors who view scarce assets as a hedge against currency weakness.

Dollar weakness accompanied the move. The ICE U.S. Dollar Index fell 0.8% during the week after the Treasury announcement. Gold also moved above its 200-day moving average, which was near $4,518 an ounce, over the same period.

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ETF Flows and Short Covering

U.S. spot Bitcoin ETFs recorded $517 million in net inflows on August 19, their strongest day since May. The funds drew roughly $1 billion in net inflows during the first two weeks of August 2026.

Short covering added to the speed of Bitcoin’s advance. Roughly $1.5 billion in Bitcoin short positions were liquidated as prices rose, with about $700 million cleared in a single minute. When traders with short positions exit their positions, the buying needed to close them can add pressure on an upward price move.

The combination of ETF demand and short liquidations helps explain the scale of the rally. The ETF news reflects flows into regulated products that allow investors to gain Bitcoin exposure through brokerage accounts without directly holding the cryptocurrency.

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Bitcoin Pumps, But Bond Yields News Remain in Focus

The Treasury said its larger buyback operations for longer-dated Treasurys would begin September 9 and were intended to provide greater liquidity support. The initial positive reaction in the bond market reversed the following day, however.

The 10-year Treasury yield rose to 4.737%, while the 30-year yield increased to 5.276%, according to Dow Jones Market Data cited by MarketWatch. Those levels brought the rates back to around where they stood before the buyback announcement.

Ian Lyngen, head of U.S. rates strategy at BMO, said concerns over de-dollarization, U.S. creditworthiness, and the need for a higher term premium remained central to the recent bond selloff. His assessment underscored skepticism that the Treasury’s buyback adjustment had changed the underlying drivers of rising yields.

A sustained break could put Bitcoin’s next test in the $95,000 to $100,000 range, but no analyst can reliably determine whether the rally will continue. For now, the August move has highlighted how macroeconomic expectations, ETF flows, and market positioning can converge.

The Treasury action was viewed by some market participants as easing-like, while Bitcoin’s fixed supply kept it in focus alongside gold as investors weighed dollar weakness and inflation concerns.

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Source: cryptonews.com