Bitcoin (CRYPTO:BTC) has gone from a market dominated by hesitation to one dominated by forced buying in less than 48 hours. After spending roughly six weeks trapped in a narrow trading range, Bitcoin jumped from about $64,500 on Wednesday to around $77,050 today — a gain of roughly 20%.
The move was not driven by one giant wave of new investors. It began with a macroeconomic catalyst and was then turbocharged by one of crypto’s most powerful mechanisms: a short squeeze. The question now is whether genuine spot demand can keep the rally alive after leveraged bears have largely been cleared out.
Treasury Liquidity Lit The Fuse
U.S. Treasury announced plans to double the maximum size of certain long-dated bond buyback operations to $4 billion, a move intended to improve Treasury-market liquidity. Treasury’s August 2026 quarterly refunding materials show plans for up to $38 billion of off-the-run securities purchases during the quarter.
The announcement initially pushed bond yields lower and weakened the dollar, creating a friendlier backdrop for scarce, risk-sensitive assets such as Bitcoin. But the macro boost was only the spark.
President Trump added another catalyst on Aug. 19, urging Congress to pass the Digital Asset Market Clarity Act during a White House meeting with cryptocurrency executives. Reuters reported that the legislation would establish clearer definitions for digital assets and determine which federal agencies oversee them. A Senate vote is scheduled for Sept. 15.
That combination was enough to push Bitcoin through resistance that had held for weeks.
Then The Bears Became The Buyers
This is where the rally becomes more about market mechanics. According to CoinGlass data, more than $3.1 billion of crypto short positions were liquidated as Bitcoin broke higher. In a short squeeze, traders betting on falling prices are forced to buy the asset to close their positions. Those purchases push prices higher, triggering more liquidations and creating a self-reinforcing loop.
At the peak, more than $1 billion in Bitcoin shorts were reportedly wiped out in a single hour. Across the broader crypto market, short liquidations reached roughly $3.3 billion.
That explains why Bitcoin could move nearly 20% so quickly after weeks of muted volatility. The market did not suddenly discover 20% more fundamental value. A crowded trade simply unwound in the most painful direction for short sellers.
The Squeeze Is Running Out Of Fuel
Short squeezes are powerful, but they are rarely durable sources of demand. Once forced sellers are gone, the market needs buyers who actually want to own Bitcoin rather than traders who have no choice but to repurchase it.
The latest liquidation figures show that process is already underway. CoinDesk data cited in recent market coverage put short liquidations at about $1.06 billion over the latest 24-hour period — down more than 60% from the initial burst.
That makes the next 24 to 48 hours important. The market is transitioning from a forced short-squeeze phase to a momentum-driven phase. Spot Bitcoin ETFs now need to take over the heavy lifting. That is possible: U.S. spot Bitcoin ETFs attracted $606.3 million on Thursday, while weekly inflows reached $1.61 billion.
Bitcoin could still push toward $79,500 over the next several days if those inflows remain strong, but the easy fuel has been burned.
Key Takeaway
In short, investors should not confuse a 20% short squeeze with proof that a new Bitcoin bull market has begun.
The bullish case is still alive. Regulatory momentum around the Clarity Act could support sentiment through the Sept. 15 deadline, while ETF inflows provide the real demand needed to extend the move.
But there is a second risk. Treasury’s expanded buyback program is scheduled as part of the current quarterly framework, with the next refunding announcement set for Nov. 4. Rising Treasury yields could also undo some of the liquidity boost that initially helped Bitcoin.
Ultimately, Bitcoin’s next leg higher needs cash buyers, not trapped bears. If ETF inflows stay above roughly $500 million a day, the $79,500 target is plausible. If those flows fade as liquidations disappear, this 20% surge could prove to be a short squeeze that ran out of shorts before it found enough new buyers.
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