Bitcoin Rally Could Lose Steam as Short Covering Fades: QCP

Strong ETF demand is supporting the rally, but fading short covering and lingering macro risks could slow its momentum.

Bitcoin’s latest rally appears to be driven partly by short covering rather than fresh leveraged positions, according to QCP Research. Open interest has fallen as BTC advanced, while strong spot ETF inflows have provided additional demand, the firm noted.

Spot demand is also strengthening, with QCP noting that ETF inflows are nearing the 95th percentile of the past year. However, the firm warned that the rally could become more fragile if short covering loses momentum and new demand does not replace it.

Strategy Raises Cash Without Adding Bitcoin

The market structure comes as Strategy raised more than $1.9 billion without adding Bitcoin to its holdings. The company reported 840,447 BTC for a second consecutive week, leaving its BTC reserve unchanged.

Strategy raised $2.01 billion through an at-the-market equity sale between August 17 and 23. It also built a $1.59 billion flexible cash reserve, bringing its total dollar assets to $6.69 billion.

The latest financing points to liquidity management rather than immediate accumulation. Strategy’s average purchase price remains $75,385 per BTC, with QCP viewing its cash reserve as support for preferred stock and post-dilution flexibility.