Bitcoin Hits 8-Month High, But 'Caution' Over Soaring Leverage Amidst $4.6 Billion ETF Inflow

▲ Bitcoin (BTC) ©Dasol Ko

Bitcoin (BTC) surpassed $87,400, reaching an 8-month high, and the total market capitalization of virtual assets also recovered to $3 trillion. The inflow of $4.6 billion into US Bitcoin spot ETFs, indicating a recovery in institutional demand, supports the upward trend. However, with open interest nearing $160 billion, the expansion of leverage has emerged as a new volatility factor.

According to investment media FXStreet on September 23 (local time), Bitcoin has risen approximately 10% this month, surpassing $87,400, and has climbed about 47% in the third quarter. Notably, since August 19, the increase rate has reached approximately 35%, breaking through the $80,000 resistance level that had suppressed prices for most of the year. Ethereum (ETH) also rose about 14% over the past week, testing $2,800, spreading upward momentum across the broader virtual asset market.

The return of institutional funds was also notable. Since August 19, approximately $4.6 billion has flowed into US Bitcoin spot ETFs, turning the cumulative net inflow for the year positive at around $320 million. On Monday, approximately $1 billion flowed in, followed by about $715 million on Tuesday. US Ethereum spot ETFs also saw an inflow of approximately $576 million for three consecutive trading days. The average purchase price of BTC held by Bitcoin spot ETFs is estimated to be around $82,000, bringing the entire holdings back into the unrealized profit zone. Strategy also ended a three-week purchasing hiatus and additionally bought Bitcoin worth $75.7 million.

The upward trend is also underpinned by improved risk asset investment sentiment and changes in financial conditions. With the AI-driven stock market rally and recent oil price declines supporting investor sentiment, pressure on long-term interest rates and financial conditions eased after the US Treasury announced an expansion of long-term bond buybacks on August 19, the media explained. Subsequently, the market capitalization of the virtual asset market increased by over $740 billion. Bitcoin's sustained upward trend despite the failure of the US crypto market structure bill, the Clarity Act, to advance in the Senate and the Federal Reserve's 25bp interest rate hike, was also evaluated as a sign of strong demand.

However, the expansion of leverage in the derivatives market is a concern. Open interest in virtual asset perpetual futures increased to approximately $160 billion, nearing its highest level since late October 2025. On Monday, bearish positions worth over $920 million were liquidated, with a short squeeze (buying pressure generated to close or cover short positions) accelerating the rise, but open interest continued to increase thereafter. FXStreet pointed out that this implies new leveraged positions are replacing the liquidated short positions, and if leverage grows faster than spot demand, even a small price correction could trigger long liquidations, increasing downward volatility. Conversely, there is also the possibility that the liquidation of remaining short positions could extend the rally if there is a further upward movement.

Technically, Bitcoin has broken above its 50-week Simple Moving Average (SMA) located at approximately $78,150 and the previous resistance level of $81,000, with this zone now turning into a key support level. The weekly Relative Strength Index (RSI) is around 64, not yet entering the overbought zone. Maintaining above the 50-week moving average would bring $90,000 into focus as the next target, and a further breakout could bring $98,000, near the year's high, into view. Conversely, if it falls below the 50-week moving average, the breakout structure would weaken, and $75,000 could re-emerge as a major downside price level. Ultimately, the sustainability of this rally depends on whether spot ETF inflows can continue to support the expansion of leverage, according to analysis.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*