Key Takeaways
- Bitcoin rose as high as $79,500 this week as the US Treasury doubled bond buybacks to $4 billion per operation.
- Automated liquidation engines force-closed 172,108 short positions earlier this week, the worst since 2021.
- Traders are now watching whether bitcoin can clear $80,000, a level not seen since May 2026.
The Treasury Trigger
Bitcoin had spent six weeks pinned between $60,000 and $65,000 before this week’s breakout. The move began after the US Department of the Treasury said it would at least double the size of its liquidity-support buyback operations for longer-dated coupon securities, raising the maximum from $2 billion to $4 billion per operation.
Treasury buybacks let the government repurchase older, less liquid bonds before maturity, effectively easing borrowing costs and injecting cash into the market. The new ceiling takes effect Sept. 9 and covers 10-to-30-year Treasury bonds through the current refunding quarter, which ends Nov. 4.
The announcement pulled the 10-year Treasury yield down roughly six basis points to about 4.647%, while the 30-year yield slid nine basis points to 5.196%, a retreat from the 5.33% level it hit earlier this month, its highest since 2007. Markets read the buyback expansion as a liquidity signal, and traders rotated into bitcoin as a hedge against renewed monetary easing.
Bernstein strategist Gautam Chhugani tied the move directly to the Treasury decision, adding:
“The strong trigger in bitcoin was driven by Treasury’s move to buyback bonds at the longer end of the yield curve.”
A Record Short Squeeze
The rally accelerated once bitcoin’s price broke above resistance near $70,000, a level it had not closed above since May. Short sellers who had built up positions during the six-week range were caught offside, and automated liquidation engines began force-closing those bets as the price climbed.
Traders who bet against bitcoin lost $3 billion in a single 24-hour window, with roughly 172,108 traders liquidated across derivatives exchanges. That made it the largest short-side wipeout since 2021, surpassing an October 2025 record of $2.47 billion. Bitcoin gained 11% in that 24-hour window alone as the forced buying compounded the Treasury-driven rally.
The timing also lined up with renewed political attention on digital assets as President Donald Trump publicly urged Congress to pass the CLARITY Act during the same window, adding a regulatory tailwind on top of the liquidity story. The bill, which would establish clearer federal rules for digital asset markets, has become one of the most closely watched storylines for crypto investors this year.
Institutional Backdrop
The price move also coincided with a White House meeting between Trump and crypto industry leaders, including executives from Coinbase and Robinhood. No policy outcome was announced from that meeting, but the optics reinforced a narrative that Washington is becoming more accommodative toward the industry, a theme that has repeatedly moved bitcoin’s price this year.
Equity markets moved in tandem with the Treasury announcement, with the S&P 500 adding 28.12 points to close at 7,719.88, and the Dow Jones Industrial Average rising 145.50 points to 53,488.90 (even as the Nasdaq Composite slipped 38.22 points to 26,251.49).
Bitcoin’s push toward $80,000 will be its first reclamation of the price point since May, and momentum indicators have started to firm up after weeks of consolidation. Interesting few days ahead.
