Who Bought Bitcoin’s Breakout? The Answer Will Decide Whether The Price Holds

In August, bitcoin’s rally was driven by spot bitcoin ETFs, which bought for nine straight trading days, and by short sellers who were forced to buy back as the price rose. When the ETF buying faded, the rally stalled.

This week’s move above $86,000 started the same way, with slightly more ETF buying in the first days than in August. But this time other buyers joined in: options dealers who had sold calls and had to buy bitcoin to stay hedged as the price climbed, and traders betting with borrowed money.

But spoiler alert: Most of that extra buying has an end date. A short seller can only be forced to buy back once. The dealers’ hedging on this quarter’s options ended when those contracts expired Friday. And traders who borrow eventually close their positions, which will mean selling.

The ETFs, by contrast, hold the bitcoin they buy until their own investors cash out. Whether the rally holds depends on whether the ETFs keep buying now that the others are dropping out.

Last week’s issue asked whether the Sept. 15 selloff was a dip or the start of a slide driven by rates. It was a dip: bitcoin rose through the Federal Reserve’s rate hike the next day.

ETFs took in money on five straight trading days through Wednesday, totaling about $2.7 billion, and added $191 million more on Thursday. Bitcoin touched $87,397 on Monday, its highest since late January, putting the average fund investor back in profit. Bloomberg Intelligence ETF analyst James Seyffart puts that average cost at $81,722 a coin, counting purchases only, and wrote on Monday that holders were “back above water for the first time since January.”

On Wednesday, a stronger-than-expected survey of US business activity sent bitcoin below $84,000 within about an hour. A weak Treasury auction later that day helped push the 10-year yield to its highest close since July 2007.

August Had Similar ETF Buying

Measured in dollars, this run’s ETF buying looks far bigger than August’s. Counted in bitcoin, it is only modestly ahead. In the first five sessions of August’s run, the funds took in $1.9 billion, or about 27,200 bitcoin at those daily prices. This month’s first four sessions alone bought about 27,300 BTC, and a fifth on Wednesday added about 4,100 BTC, worth about $347 million, even as bitcoin’s price fell. That put the total at about 31,400, roughly 15% ahead of last month’s pace.

Bitcoin bought by US spot bitcoin ETFs, cumulative, counted from the first day of each run: Aug. 17 and Sept. 17, 2026. Each day’s net flow is divided by that day’s closing price. Source: Farside; Coinbase; Unchained analysis.

Futures traders pulled back during August’s run instead of adding bets. A Glassnode and Bybit report found that open interest, the number of outstanding futures contracts counted in bitcoin, fell 12.6% over five days of August’s rally. Short sellers accounted for 89% of the dollars liquidated.

After August’s nine sessions of buying, ETF flows turned mixed, and bitcoin traded between about $75,000 and $82,000. Wintermute later wrote in a weekly note that the August move “initially looked like a pure short squeeze” and then settled into a range that “held its first two macro tests.”

Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, said on X “a $4.6b tsunami of cash” has come in since Treasury Secretary Scott Bessent said the Treasury would buy more bonds.

In the rest of the issue, subscribers get:

- What each of the four buyers — ETFs, short sellers covering, options dealers hedging and levered longs — did in the breakout, and which of them are likely to stop soon
- What the ETF buying needs to do for the price to hold, and where to check it each night
- Who is selling into the rally, and how much they moved to exchanges near $88,000
- What Friday’s options expiry removed from the market, and why Deribit’s CEO says the trading range can reset
- Bull, base and bear ranges for bitcoin, and the dates through Oct. 28 that decide between them