Bitcoin's advance from approximately $63,500 to above $80,000 received substantial support from spot buying rather than new leveraged positions, QCP Capital said on Aug. 28, offering a structurally healthier foundation for the rally.
Spot Demand Drives the Rally
The trading firm estimated that U.S. spot Bitcoin exchange-traded funds attracted roughly $2.8 billion across eight consecutive sessions during the rally. Meanwhile, BTC-denominated futures open interest declined from about 646,000 BTC in mid-August to 588,000 BTC. That combination suggests spot purchases and short covering drove much of the move.
QCP said funding rates remained contained during the advance, despite the sharp increase in price. Falling open interest means traders closed futures positions on a net basis. Some bearish traders likely bought Bitcoin or futures to cover short positions as prices rose.
ETF Outflows Test the Thesis
The latest ETF data introduced the first clear test of QCP's spot-support thesis. U.S. spot Bitcoin ETFs recorded $201.9 million in net withdrawals on Aug. 28, ending nine consecutive inflow sessions. ARK 21Shares' ARKB posted $114.9 million in outflows, Bitwise's BITB lost $49.7 million, and BlackRock's IBIT recorded $33.4 million in withdrawals.
The reversal represented a $444.2 million change from the previous session's $242.3 million inflow. However, the funds still collected approximately $924.5 million over the Aug. 24-28 trading week. Bitcoin subsequently traded near $77,500 on Aug. 29 after falling about 2.9% over 24 hours.
Inflation Keeps the Federal Reserve Constrained
Bureau of Economic Analysis data showed that headline personal consumption expenditures inflation reached 3.7% year over year in July. Core PCE, which excludes food and energy, remained at 3.3%. Both indexes rose 0.2% from June. The annual figures remained above the Federal Reserve's 2% objective.
Federal Reserve Chair Kevin Warsh reinforced that concern during his Aug. 28 Jackson Hole address, saying the Fed's "predominant focus right now should be on prices." Markets had assigned an estimated 35% probability to a 25-basis-point September rate increase before the speech.
Treasury Buybacks Provide Liquidity
The U.S. Treasury Department will increase its long-end liquidity-support buybacks from a maximum of $2 billion to at least $4 billion per operation starting Sept. 9. The program aims to improve trading liquidity in older Treasury securities. It does not create central-bank reserves and does not constitute Federal Reserve quantitative easing.
For Bitcoin, the next test is whether ETF demand returns while funding remains contained. A gradual recovery in open interest would point to measured positioning. Rapid leverage growth alongside rising prices would make the advance more vulnerable to liquidations.
