Bitcoin rallies as Trump remarks and ETF inflows support gains

Bitcoin (CRYPTO: BTC) is up 20% this week, but questions remain whether the rally is driven purely by short liquidations or returning U.S. spot demand.

Two Indicators Yet to Confirm Strength CryptoQuant market commentator Axel Adler Jr. said Friday that two key indicators have yet to confirm the strength of the latest rally.

The Coinbase Premium Index, which compares BTC prices on Coinbase with Binance, remained negative throughout the advance.

While improvement from -0.11 to -0.046 signals stronger U.S. demand, it never crossed into positive territory.

This implies American spot investors have participated in the recovery but have not been its primary driver.

A move above zero in the Coinbase Premium would be the stronger confirmation.

Secondly, dollar-denominated open interest increased 11.7% to $25 billion as Bitcoin rallied.

However, measured in BTC, open interest declined 8.7%, falling from 366,000 BTC to 334,000 BTC.

The divergence indicates traders were closing existing positions rather than aggressively adding fresh leverage.

While Adler sees that as constructive for market structure, he believes "price is rising faster than new positions are being built." Then What Sparked the BTC Rally? Bitcoin advocate and podcast host Scott Melker offered a three-part explanation for Bitcoin's breakout in his Thursday livestream.

First, Treasury's decision to buy back long-dated bonds provided the initial catalyst.

Then, liquidation of excessive leverage amplified the move, while President Trump's pro-crypto remarks added another tailwind.

Nearly $3 billion in short positions were liquidated over 24 hours as BTC surged past $71,000, providing the "gasoline" that accelerated the rally.

Spot Bitcoin ETFs provided additional support, recording $517.19 million in net inflows (on Aug.19), their strongest showing in almost 3.5 months.

As of Aug.

20, net inflows spiked to $606.3 million.

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