Prior to this week's breakout, Bitcoin had been fluctuating in a range between $60,000 and $65,000 for six weeks. The move began after the U.S. Treasury Department announced it would at least double the size of its long-term coupon security buyback operations to support liquidity, raising the maximum amount from $2 billion to $4 billion per operation.
Treasury buyback operations allow the government to repurchase older, less liquid bonds before maturity, effectively lowering borrowing costs and injecting cash into the market. The new maximum level takes effect on September 9th and applies to Treasury bonds with maturities from 10 to 30 years during the current refunding quarter, which ends on November 4th.
This announcement led to a drop in 10-year Treasury yields by about six basis points to 4.647%, while 30-year yields fell by nine basis points to 5.196%, retreating from the 5.33% level reached earlier this month—the highest since 2007. Markets interpreted the expansion of the buyback program as a signal of liquidity, and traders shifted focus to Bitcoin as a hedge against a possible resumption of monetary policy easing.
Bernstein strategist Gautam Chhugani directly linked this movement to the Treasury's decision, adding:
"A strong catalyst for Bitcoin's surge was the Treasury Department's decision on bond buybacks on the long end of the yield curve."
A Record 'Short Squeeze'
The rally accelerated once Bitcoin's price broke through the resistance level around $70,000—a level it hadn't closed above since May. Short sellers, who had been building up their positions during the six-week range, were caught off guard, and automated liquidation mechanisms began forcibly closing these positions as the price rose.
Traders who had bet against Bitcoin lost $3 billion in just 24 hours: positions of approximately 172,108 traders were liquidated on derivatives exchanges. This marked the largest short position wipeout since 2021, surpassing the October 2025 record of $2.47 billion. In just those 24 hours, Bitcoin gained 11%, as forced buying exacerbated the rally triggered by the Treasury's actions.
This coincided with renewed political attention to digital assets: during the same period, President Donald Trump publicly urged Congress to pass the CLARITY Act, adding a regulatory impetus to the liquidity-driven rise. This bill, which would establish clearer federal rules for digital asset markets, has been one of the most closely watched topics for crypto investors this year.
The Institutional Context
The price movement also coincided with a meeting at the White House between Trump and leaders of the cryptocurrency industry, including executives from Coinbase and Robinhood. No policy decisions were announced following this meeting, but the very image reinforced the view that Washington is becoming more favorable towards the industry—a theme that has repeatedly influenced Bitcoin's price this year.
Stock markets moved in sync with the Treasury's announcement: the S&P 500 index added 28.12 points to close at 7,719.88, and the Dow Jones Industrial Average rose 145.50 points to 53,488.90 (though the Nasdaq Composite index fell 38.22 points to 26,251.49).
Bitcoin's climb towards the $80,000 mark will be the first return to this price level since May, and momentum indicators are beginning to strengthen after several weeks of consolidation. Interesting days lie ahead.
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