BTC Surges 8% Toward $77,000 as Short Squeeze Accelerates

Key Takeaways

• Bitcoin surged more than 8% to nearly $77,000, putting the cryptocurrency on course for its strongest weekly gain since February 2024.
• Expanded US Treasury bond buybacks, falling long-term yields and President Donald Trump’s renewed push for the Clarity Act improved demand for risk assets.
• Approximately $2.7 billion in crypto short positions were liquidated, while US spot Bitcoin ETFs attracted $517.2 million in one session.

Bitcoin price surges above $76,000

Bitcoin extended its sharp recovery on Friday, climbing towards $77,000 as improving liquidity expectations, regulatory optimism and forced short covering combined to drive one of the cryptocurrency’s strongest rallies in years.

At the time of writing, Bitcoin was trading near $76,987 after reaching an intraday high of approximately $77,121. The cryptocurrency had gained more than 8% during the session and roughly 19% over the week, placing it on course for its strongest weekly performance since February 2024.

The move also lifted Bitcoin to its highest level since late May, reversing much of the weakness that had dominated the market during the previous two months. Bitcoin had traded close to $64,000 before the rally accelerated, meaning its price increased by almost $13,000 within a relatively short period.

The latest rally was not driven by a single development. Instead, it reflected the combined impact of changes in the US Treasury market, renewed political support for crypto regulation, stronger exchange-traded fund demand and a historic liquidation of bearish positions.

Treasury bond buybacks support Bitcoin and risk assets

One of the most important catalysts came from the US Treasury market, where rising long-term borrowing costs had previously weighed on equities, cryptocurrencies and other risk-sensitive assets.

The US Treasury announced that it would at least double the maximum size of liquidity-support buybacks for nominal Treasury securities with maturities between 10 and 30 years. The maximum purchase amount will rise from $2 billion to at least $4 billion per operation, beginning on September 9.

Treasury Secretary Scott Bessent subsequently indicated that the programme could be expanded beyond $4 billion if market conditions required additional support.

The announcement followed a sharp increase in long-term yields. The 30-year Treasury yield had reached approximately 5.34%, its highest level since 2007, before falling after the buyback plan was revealed. Lower bond yields can support Bitcoin by reducing the relative appeal of interest-bearing assets and easing the financial conditions applied to more speculative investments.

The move also contributed to weakness in the US dollar. Bitcoin and gold both advanced as some investors sought alternatives to dollar-denominated assets amid renewed concerns about US government debt and fiscal policy. Bitcoin was heading for a weekly gain of approximately 19%, while the dollar index was on course for a weekly decline of around 0.9%. Treasury-market volatility nevertheless remained elevated, suggesting that the relief could still prove temporary.

The Treasury’s bond purchases should not be confused with quantitative easing. The Federal Reserve has not announced a new monetary stimulus programme. However, markets interpreted the larger buybacks as an important signal that policymakers were prepared to improve liquidity and limit disorderly moves in long-term yields.

Record crypto short squeeze accelerates the rally

The initial increase in Bitcoin quickly developed into a powerful short squeeze as traders who had positioned for further declines were forced to close their bearish positions.

Total crypto short liquidations reached approximately $2.7 billion, while more than $1 billion in Bitcoin short positions was reportedly liquidated within about one hour. This represented one of the largest waves of forced short covering recorded in the cryptocurrency market.

A short squeeze occurs when an asset rises unexpectedly and traders holding leveraged short positions must buy it back to limit losses or meet margin requirements. Those forced purchases create additional demand, which can push the price even higher and trigger further liquidations.

Bitcoin’s rapid move through $70,000, $72,000 and $75,000 therefore reflected both genuine buying demand and the mechanical unwinding of leveraged bearish trades. The liquidation wave helps explain why the price increased much faster than the underlying policy announcements alone might normally justify.

However, short-squeeze rallies can also produce significant volatility once the most vulnerable positions have been removed. With leverage rapidly rebuilding after the initial move, relatively small changes in market sentiment could generate sharp price swings in either direction.

Trump’s Clarity Act push adds a regulatory catalyst

Political developments in Washington provided a second major catalyst. President Donald Trump used a White House meeting with technology and cryptocurrency executives to urge Congress to pass what he described as a fair version of the Digital Asset Market Clarity Act.

The proposed legislation is intended to establish a clearer regulatory framework for digital assets and define the respective responsibilities of the Securities and Exchange Commission and Commodity Futures Trading Commission.

Trump’s remarks reinforced the administration’s broader ambition to make the United States a global centre for cryptocurrency and blockchain development. The White House has already established a Strategic Bitcoin Reserve and promoted a more innovation-focused approach to digital-asset regulation.

The prospect of clearer rules is particularly relevant to institutional investors, exchanges and publicly traded crypto companies. Regulatory uncertainty can discourage larger investors from entering the market or launching new products. A clearer division of oversight between US regulators could reduce some of those barriers.

The legislation still faces political obstacles, including disagreements over consumer protection, conflicts of interest and the appropriate treatment of individual tokens. Its passage is therefore not guaranteed. Nevertheless, the renewed political push helped lift sentiment towards Bitcoin and crypto-related shares, including Coinbase, Strategy and Circle.

Bitcoin ETF inflows signal returning institutional demand

US spot Bitcoin ETFs also recorded a sharp improvement in demand during the rally. The funds attracted approximately $517.2 million in net inflows on August 19, their strongest single session in roughly three and a half months.

BlackRock’s iShares Bitcoin Trust accounted for approximately $284.7 million of the total. Weekly Bitcoin ETF inflows approached $1 billion, indicating that regulated investment products participated in the rally alongside activity in futures and leveraged crypto markets.

ETF flows are closely watched because they can provide a measure of institutional and traditional investor demand. Sustained inflows would suggest that the rally is supported by longer-term capital rather than being entirely dependent on short covering.

Conversely, a return to ETF outflows after the initial surge could weaken the bullish momentum, especially once forced liquidations stop contributing to buying pressure.

Bitcoin price outlook: Can BTC break above $80,000?

Bitcoin’s immediate technical resistance is located around the intraday high near $77,100. A sustained break above this area could bring the psychologically important $80,000 level into focus.

Holding above $75,000 would help preserve the current momentum and confirm that buyers remain active following the short squeeze. Below that level, the $72,000 area represents an initial support zone, followed by the previous breakout level around $70,000.

The outlook will depend on whether Treasury yields continue to fall, the dollar remains under pressure and spot Bitcoin ETFs maintain positive inflows. Progress on the Clarity Act could provide an additional catalyst, although political delays may quickly reduce the regulatory optimism priced into the market.

Traders will also be watching whether Bitcoin can consolidate after such a rapid advance. A period of stable trading above $75,000 would indicate that new demand is absorbing profit-taking. A sharp reversal below $70,000, by contrast, would suggest that much of the move was driven by temporary short covering rather than a lasting improvement in market demand.