Today, the price of Bitcoin has experienced a 5% increase, marked by a notable and sudden upward movement in its price chart. This surge propelled the price to reach a peak not seen in the past two weeks, surpassing the $28,000 mark. This upward momentum was triggered by the favorable ruling from United States Court of Appeals Circuit Judge Neomi Rao, who ruled in favor of the Grayscale Bitcoin Trust (GBTC) in its legal battle against the U.S. Securities and Exchange Commission (SEC).
This judicial verdict has further accentuated the recent surge in institutional interest in Bitcoin, as evidenced by companies like BlackRock and Fidelity Investments. Both of these financial giants have shown interest in Bitcoin, as indicated by their support for BTC and their plans to launch Bitcoin spot exchange-traded funds (ETFs). These developments have gained significant attention and are scheduled to be discussed on September 2nd. As of the most recent update, the BTC ticker is trading at approximately $27,396.
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Surge in Institutional Interest Ignites Bitcoin Rally
The rally that commenced on August 29 for Bitcoin’s price was triggered by Rao’s decision to nullify the SEC’s ruling to reject the GBTC spot ETF based on concerns of “fraud.” This determination followed the company’s legal challenge against the SEC’s stance on the viability of Bitcoin futures on June 30, 2022. While the ruling doesn’t constitute an endorsement of the spot ETF, Rao decreed:
“Grayscale’s appeal should be granted, and the Commission’s order should be vacated, in line with the court’s judgment.”
Furthermore, the judge’s action to reverse the SEC’s denial of the Grayscale ETF has also provided a boost to the Grayscale ETF itself. The discount is now approaching its highest levels of 2023, at just under 25%.
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Up until now, the Securities and Exchange Commission (SEC) has consistently declined to give its approval for a Bitcoin exchange-traded fund (ETF) focused on the spot market. This rejection has been applied to a range of applicants, which notably includes prominent names like BlackRock, Fidelity, Cathie Wood’s ARK, and 21Shares, the latter of which has submitted applications for approval on three separate occasions.
BlackRock holds the distinction of being the world’s largest asset management firm, managing an extensive portfolio exceeding $8.5 trillion. According to the filing made with the SEC, the company plans to partner with Coinbase to act as the custodian for the Bitcoin held within the trust. As the calendar turns to September, the SEC is facing a series of decisions regarding ETF applications, encompassing possibilities of approval, denial, or deferment.
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Reduced availability of BTC on exchanges
In sync with the Bitcoin price surge on August 29th, the quantity of BTC available on exchanges is declining to its lowest point since January 2018.
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The departure of coins from cryptocurrency exchanges is seen by the market as a positive indication, as traders usually move their BTC off exchanges for long-term self-custody, reflecting a bullish sentiment.
Fascinatingly, data from on-chain sources reveals that exchanges have been gradually reducing their Bitcoin holdings since May 18, 2023. This implies that considerable numbers of Bitcoin investors are preparing for a potential price surge, despite the prevailing prolonged bearish trend in 2023.
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Liquidations might be propelling the upward movement of the Bitcoin price.
As Bitcoin maintains its departure from exchanges, the decreased availability of assets for liquidation is amplifying volatility. In the last 24 hours alone, more than $46.5 million worth of BTC short positions have been forcibly closed, contributing to a broader trend of over $100 million in short positions being liquidated across the entire cryptocurrency market.
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Even though short-sellers have been facing consecutive losses, 48% of the futures market still maintains a bearish position on the Bitcoin price. Given the persistently high percentage tilted towards short positions, there exists a possibility for a short squeeze, which could result in a notable upward movement of the Bitcoin price.
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Although the Bitcoin price is displaying a certain bullish momentum in the near term following the Grayscale ruling and short liquidations, the Bitcoin Fear & Greed Index indicates that the market sentiment remains apprehensive, having dropped by more than 13 points in comparison to the previous month.