Bitcoin Hits ATH as Short Squeeze and ETFs Fuel Rally

Key Takeaways

• A BTC Cup & Handle chart pattern breakout, targets the $140k–$160k region
• Record ETH ETF flows, ETH treasury buying, and strong staking inflows
• Favorable US digital asset bills likely to pass; hot CPI could delay rate cuts

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Digital Asset Commentary

Bitcoin has broken above multi-month resistance, setting a new all-time high (ATH) at $123k. This breakout confirms the Cup and Handle bullish continuation chart pattern, which now projects a potential target range of $140k to $160k. The rally was fueled in part by a massive short squeeze across crypto exchanges, with approximately $326 million in short positions liquidated on July 10th, according to Glassnode, one of the highest daily liquidation totals on record. CME BTC futures data also shows that speculators continue to expand short positions while crypto margin funding remains relatively calm, adding more potential fuel for the rally due to increasingly offsides positioning. BTC ETFs saw over $2.7 billion in net inflows last week, marking one of the largest weekly flows ever as BTC treasury companies continue to also gobble more BTC.

Ethereum shows a similarly strong setup. ETH ETF flows hit a record high last week at nearly $1 billion. Net short positioning and calm margin funding levels suggest there’s additional upside potential for ETH as well. Several ETH treasury companies have recently emerged, aiming to replicate Saylor’s Strategy with ETH holdings. Staking metrics are also robust, with an entry queue for new validators, an all-time high in active validators, and record ETH supply staked. Collectively, this should act as a bullish tailwind for ETH as more tokens are removed from circulation.

On the regulatory front, several key bills are expected to be voted on this week, including the GENIUS Act for stablecoin legislation, the CLARITY Act to establish a crypto market structure framework, and an anti-CBDC bill. These measures have a high likelihood of passing and would help solidify US digital asset leadership while broadening the range of crypto products available to investors.

One potential headwind for the market is this week’s CPI print. A stronger-than-expected inflation reading could delay the two rate cuts currently priced in by CME Fed Rate probabilities, which might temper risk appetite if inflation shows signs of re-accelerating.

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