Bitcoin’s $85K rally started with ETFs, but leverage is rising

Bitcoin has reached an eight-month high before retreating toward $85,000, as U.S. spot ETFs have drawn about $1.7 billion in two days and futures traders have added more than $2 billion in new positions.

Summary

• U.S. spot Bitcoin ETFs took in $999 million on Sep. 21 and $714.7 million on Sep. 22.
• BTCS adviser Wojciech Kaszycki sees a rally that began with spot demand but is attracting leverage.
• He puts the next test at $90,000, where holders may sell after recovering earlier losses.
• Kaszycki says treasury companies should pace purchases and avoid borrowing against their Bitcoin.

Wojciech Kaszycki, strategy adviser to Warsaw-listed Bitcoin treasury company BTCS S.A., told crypto.news that ETF inflows, futures open interest and funding rates together give a clearer picture of the rally than price alone. In his assessment, cash buying supported the initial move, while borrowed positions have started to accumulate on top of it.

“Simple test: who is buying, and with what money,” Kaszycki said. He described ETF demand as cash entering funds, while leveraged futures positions can be closed by force if prices turn against traders.

The distinction has become more pressing after Bitcoin reached $87,392 on Sep. 21, its highest price since Jan. 29, according to Bitfinex Alpha. By Sep. 24, it had fallen back toward $84,000, even as U.S. spot Bitcoin ETFs recorded another day of net inflows.

Bitcoin ETF buying has outpaced the rise in open interest

Kaszycki said he looks first for ETF inflows that continue over weeks, rather than a single large trading day. He then compares the change in futures open interest with Bitcoin’s price: if outstanding contracts grow much faster than the price, more of the advance may depend on borrowed money. Funding rates show what traders are paying to keep long positions open.

For the latest move, he cited about $1 billion of U.S. spot ETF inflows on Monday and $700 million on Tuesday. Bitfinex reported the more precise daily totals as $999 million on Sep. 21 and $714.7 million on Sep. 22. Its report on Bitcoin’s buyer range also placed a large concentration of recent purchases between $85,000 and $86,500.

Kaszycki estimated that open interest was up about 7% over a month, with funding around 8% on an annualized basis. He called the funding rate positive but not excessive, while warning that the balance could change if traders keep adding leverage faster than cash buyers enter the market.

“Spot-led start, with leverage now climbing on top,” he said. “That second part is what I’ll be watching next week.”

He contrasted the current setup with August, when, in his account, a rally faded as ETF buying paused. Kaszycki said open interest fell and funding approached zero in early September before the latest fund inflows arrived.

Since Tuesday’s inflow, U.S. funds have recorded another positive session: SoSoValue data cited in coverage of the five-day ETF streak put Sep. 23 net inflows at $346.98 million. Bitcoin nevertheless pulled back from above $87,000, showing that fund subscriptions and the spot price need to be assessed separately.

A move through $90,000 would meet selling, Kaszycki says

Kaszycki sees $90,000 as both a round-number trading level and a test of whether spot buyers can absorb sales. He said holders who bought Bitcoin between $90,000 and $110,000 last year may use a return to that range to sell near their purchase prices. Investors who bought around $63,000 in August may also take profits.

Short liquidations could push Bitcoin higher as traders buy back contracts to close losing positions, he said, but such buying ends once those positions have been cleared. In his view, holding a price above $90,000 would require continuing ETF subscriptions and purchases through corporate or over-the-counter channels.

“What happens to spot flows in the two weeks after we touch it is the story,” Kaszycki said.

For U.S. investors, the daily ETF figures offer one visible measure of demand through listed products. They do not, on their own, identify the end investors placing orders or establish when the funds acquired the underlying Bitcoin. A Sep. 24 examination of buyers after the Fed hike found that the funds took in about $2.65 billion across five sessions through Sep. 23, after losing $746.3 million over Sep. 15 and 16.

Bitcoin treasury purchases depend on the financing price

For companies that hold Bitcoin, Kaszycki favors scheduled purchases over attempts to time each rally or pullback. He said BTCS carries out most of its larger purchases over the counter with market makers. When trading becomes fast, the company reduces the size of individual orders and spreads them out rather than stopping its buying program.

He also described selling put options below the market as one approach BTCS uses: the company receives a premium if the option expires without a purchase, or buys coins at the option’s agreed price if it is exercised. The result depends on the contract terms and Bitcoin’s price at expiry.

Kaszycki placed particular weight on how a listed company pays for additional coins. In his view, issuing shares to buy Bitcoin makes sense only when the shares trade above the value of the Bitcoin the company already holds. Issuing equity below that value, he argued, can reduce the Bitcoin attributable to each existing share.

U.S. treasury companies provide a recent example of the financing choices investors can examine. Strive said it used proceeds from SATA preferred stock to fund a $36.6 million purchase of 469 BTC between Sep. 8 and Sep. 11, according to a report on its treasury purchase. The transaction raised its reported holdings to 25,000 BTC.

Futures liquidations can reach corporate holders quickly

Kaszycki said fund transactions and futures liquidations operate on different schedules. U.S. ETF activity runs through trading-day processes, while leveraged crypto positions can be liquidated within minutes at any hour. A sharp futures sell-off can therefore lower the market value of a corporate Bitcoin holding even when the company has not borrowed against its coins.

Debt-funded companies face a second pressure in his assessment: a falling Bitcoin price reduces the value of their holdings while a declining share price can make new capital harder to raise. He advised companies to avoid margin, perpetual futures and borrowing against their Bitcoin on terms that can trigger a rapid demand for repayment.

“If you must hedge, use options where the maximum loss is the premium you paid,” Kaszycki said. He added that liquidations of other traders’ positions can still force an unleveraged company to record a lower market value for its Bitcoin holdings.