On August 21, Bitcoin, the leading cryptocurrency, surpassed the $75,000 mark, reaching a new local price peak since early summer.
At one point on Binance, prices soared to $75,744.
15-minute BTC/USD chart from Binance. Data: TradingView.The unexpected upward trend for Bitcoin began on August 20, with the asset gaining nearly 8% in just one day, confidently breaking through the $70,000 threshold. This surge triggered a record $1.42 billion in short position liquidations, with the resulting short squeeze further propelling prices upward.
In the last 24 hours, the total liquidation volume across the cryptocurrency market reached $1.25 billion, with over $1 billion attributed to short positions.
Source: CoinGlass.Over the past week, Bitcoin's value has increased by almost 19%. Among the top 10 cryptocurrencies by market capitalization, XRP led the charge, rising approximately 30% to reach $1.3.
Source: CoinMarketCap.Ethereum is trading around $2,350 (+25%), while HYPE has rebounded to $73 (+28%).
Analysts Warn of Premature Growth
Market participants believe that the primary catalyst for this rally was the U.S. Department of the Treasury's announcement of plans to at least double its bond buyback operations as part of a liquidity support program.
Additional positive factors included the SEC's proposals for cryptocurrency regulation and a meeting between industry representatives and President Donald Trump at the White House.
However, Sean Yang, chief analyst at MEXC Research, commented to The Block, stating that the market is "overvaluing the Treasury's intervention."
"The Department opened a safety valve, but everyone interpreted it as a regime change. The movement in bonds led to the closure of short positions faster than it improved the macroeconomic situation for Bitcoin," he noted.
The Treasury continues to "aggressively compete" for additional capital needed for cryptocurrencies. The intensity of the short squeeze indicates a heavily one-sided market position, and while the Treasury's announcement served as a trigger, it did not enhance the fundamental outlook for digital gold, Yang added.
Dominic John, an analyst at Zeus Research, believes that while the closure of short positions will temporarily push prices higher, it will eventually deplete the primary source of forced buying. Once these positions are closed, the rally should continue, fueled by real spot demand, liquidity, and macroeconomic factors, he explained.
"The real test now is whether the influx of new investments can turn the short squeeze into sustainable growth," John stated.
Has the Bottom Been Reached?
According to Julio Moreno, head of research at CryptoQuant, Bitcoin is still officially in a bear market, meaning a correction is possible, especially following such a sudden surge.
The expert elaborated to Decrypt that he is primarily monitoring the 365-day moving average price (currently around $83,000) and the profit/loss index from CryptoQuant. At this moment, neither of these indicators confirms a bullish trend.
Nikolai Sondergaard, a senior analyst at Nansen, considers the 200-day average, which has recovered to $69,000, as a critical indicator. Maintaining this level suggests a potential breakout above.
However, he cautioned that much of the rally has been driven by liquidations rather than sustained buying, making the rise vulnerable.
"The greatest risk is that this was a temporary spike in demand, not a new sustainable increase. Once the market pressure eases, such support could quickly turn into its opposite," the analyst emphasized.
Adam McCarthy, a researcher at Lo:Tech, suggests that the momentum from the Treasury's decision may already be spent and that "real purchases" will be needed for the rally to continue.
"The short base has largely been cleared, and nothing has emerged in its place, so the movement that brought us here cannot be repeated," he noted.
Ismael Asad, an analyst at Bitwise Research, holds a more optimistic view, deeming the rally as the most convincing evidence that Bitcoin has reached its bottom. However, he does not expect the upward movement to continue at the same pace.
"In the coming months, the market is likely to move sideways or upward as we approach important milestones, such as the potential Senate vote on the Clarity Act in September," he explained.
James Butterfill, head of research at CoinShares, also anticipates that macro conditions for Bitcoin will remain favorable. He believes the cryptocurrency will trade within a certain range but is unlikely to achieve a sustainable breakout just yet.
He noted that the key level to watch is $80,000. Additionally, CryptoQuant has indicated that on-chain metrics are showing the first signs of recovering spot demand for Bitcoin, signaling a possible end to the bear phase.