Bitcoin's latest rally is finding a new engine: institutional money flowing through spot ETFs.

Over the past week, Bitcoin climbed more than 23% to around $77,500 on Friday. Meanwhile, U.S. spot Bitcoin ETFs pulled in roughly $1.6 billion in net inflows from Monday through Thursday, their strongest weekly showing of 2026, according to data from The Block cited by The Wall Street Journal. Thursday alone accounted for about $606 million.

This shift matters because it could change the character of Bitcoin's rebound.

From Short Squeeze To ETF Demand

The initial rally was largely a short squeeze. More than $4.3 billion in crypto short positions were liquidated as Bitcoin broke higher, creating a feedback loop of forced buying and rising prices.

But ETF flows offer a potentially more durable catalyst.

Standard Chartered analyst Geoff Kendrick said Bitcoin's recovery has been supported by both short liquidations and recovering spot ETF inflows, according to Cointelegraph. He now believes his previous $100,000 year-end forecast may be too low, with Bitcoin potentially retesting its $126,000 all-time high before year-end.

Kendrick hasn't formally replaced the $100,000 target with $126,000. Instead, he sees the record as a level Bitcoin could revisit if the recovery gains more steam.

Why ETF Investors Matter

The renewed demand is significant because spot Bitcoin ETFs give institutions and traditional investors a regulated, exchange-traded way to get Bitcoin exposure.

BlackRock's iShares Bitcoin Trust (NASDAQ:IBIT) has been a major beneficiary of the recent resurgence. On Tuesday, IBIT accounted for roughly 76% of the day's $189.3 million in U.S. spot Bitcoin ETF inflows, according to data cited by Cointribune.

That concentration makes IBIT an important ETF to watch if the inflow trend continues.

The $126K Test

Bitcoin's move above the $76,000 level marks a significant technical recovery after months of being trapped between roughly $60,000 and $65,000.

The next challenge is whether ETF demand can replace short covering as the primary source of buying pressure.

If flows remain strong, the argument for a sustained institutional-led rally strengthens. Standard Chartered sees potential acceleration after Oct 6, the date Bitcoin reached its previous record last year, per Cointelegraph.

At roughly $77,500, Bitcoin would still need to gain about 63% to reach $126,000.

That makes ETF flows the key number to watch: the short squeeze can push Bitcoin higher quickly, but sustained ETF demand may determine whether the rally has enough fuel to reach a new record.