Bitcoin rally fueled by ETF inflows and U.S. regulatory tailwinds

Bitcoin is extending its gains, rising above $77,000. More than $1 billion flowed into spot bitcoin exchange-traded funds over two days. Expectations of changes in the U.S. policy environment and large-scale short-position liquidations also increased the size of the rise.

On Aug. 21, blockchain outlet Decrypt assessed that bitcoin's rise grew larger as institutional buying resumed while large-scale short-position liquidations also took place.

The increase in spot demand was also confirmed in fund flows for spot bitcoin ETFs. Spot bitcoin ETFs recorded net inflows of about $517 million on Aug. 19 and about $606 million on Aug. 20. Earlier this month, they also drew a total of about $853.5 million over five consecutive trading days.

Macro conditions also supported the rally. Lacy Zhang (레이시 장), an analyst at Bitget, analyzed that the U.S. Treasury's plan to expand long-term Treasury buybacks led to a weaker dollar and revived demand for stores of value such as bitcoin and gold.

Julio Moreno (훌리오 모레노), an analyst at CoinShares, also pointed to the U.S. Treasury's announcement and U.S. President Donald Trump's mention of the possibility of government-level bitcoin purchases as catalysts. He added that spot demand had shown signs of recovery several days before those announcements.