Billions in Crypto Short Liquidations Fuel Record Bitcoin Rally

Treasury Intervention and Macroeconomic Catalysts

Cryptocurrencies saw enthusiasm return on Wednesday when US Treasury Secretary Scott Bessent revealed intentions to expand the Treasury’s long-dated bond buybacks by at least a factor of two. According to Max Stuedlein, head of partnerships at Sygnum APAC, speaking to CNBC, the policy move aimed to address mounting concerns over long-term borrowing costs, rising US debt levels, and the crowding-out effect of debt issuance by hyperscalers.

The intervention pulled longer-term Treasury yields lower, easing pressure on risk-on assets globally. Rachael Lucas, an analyst at BTC Markets, told Bloomberg that the Treasury decision was the true engine of the move. Nothing has rewritten Bitcoin’s long-term case, but nothing has rewritten its volatility either, Lucas noted.

Standard Chartered Plc’s global head of digital-assets research, Geoffrey Kendrick, struck an even more aggressive tone. In a note to clients, Kendrick warned that his end-year forecast of $100,000 for Bitcoin now carries the risk of proving too low.

Liquidation Dynamics and Institutional Inflows

The price acceleration caught leveraged bearish traders off guard, generating a violent short squeeze. Over a span of three days, Bloomberg and CNBC were informed by Adam Morgan McCarthy—the lead researcher at LO:TECH, a digital-asset liquidity and market data firm based in London—that roughly $2.5 billion in leveraged bearish bets on Bitcoin and $4.5 billion across all crypto assets were wiped out.

Bearish bets on BlackRock Inc’s IBIT exchange-traded fund had climbed throughout the year, with short interest on the $55 billion fund reaching roughly 3% per S3 data. As those positions unwound, institutional buyers stepped back into the market. Among the 13 spot Bitcoin exchange-traded funds listed in the United States, collective weekly inflows are on pace for their highest levels since January as these products drew in in excess of $1 billion during the week.

Crypto-linked equities tracked the underlying asset higher. Coinbase Global Inc jumped more than 8% at points during the week, while Bitcoin accumulator Strategy Inc gained 4.5% to 6%, and stablecoin issuer Circle Internet Group climbed between 5% and 7% across reporting outlets. Data from CryptoQuant indicates that large Bitcoin holders, commonly known as whales, accumulated roughly $2.75 billion worth of the token over the preceding 60 days.

Diverging Safe Havens and Policy Momentum

Not all market participants view the cryptocurrency surge as a clean fundamental signal. McCarthy argued that gold provided a clearer picture of investors hedging against currency and inflation risks, noting that gold reached its highest level since May while Bitcoin’s price action relied heavily on forced buying from short liquidations. Bridgewater Associates founder Ray Dalio echoed a diversified view in a LinkedIn post on Friday, suggesting investors underweight bonds and hold 10% to 15% of portfolios in gold alongside a modest allocation to Bitcoin.

Political developments added further momentum. US President Donald Trump met with industry executives this week—including representatives from Coinbase Global and Payward Inc—and urged the Senate to pass the Clarity Act, a stalled market-structure bill. While the legislation failed to secure a vote before the August recess, the meeting bolstered market sentiment.