A sharp reversal in the Bitcoin market has triggered a large-scale liquidation of short positions.
On August 20, Bitcoin broke through $70,000, hitting its highest level since June 2. As the price surged rapidly, a significant accumulation of short positions in the market faced concentrated liquidation. Within approximately one hour, over $1 billion worth of Bitcoin short positions were forcibly liquidated, marking a rare wave of short liquidations on a scale not seen since 2021.
The core driver of this move was not simply new buying, but rather the collective stop-loss exits from the substantial short positions accumulated earlier as prices rose quickly, creating significant passive buying pressure that further amplified gains. Concurrently, news of Trump meeting with crypto industry executives and the U.S. Treasury's expansion of treasury buyback scale also provided support for risk asset sentiment.
It is worth noting that on-chain capital flows have also shifted recently. According to CryptoQuant data, as of August 19, large holders (whales) had accumulated a net increase of approximately 43,000 Bitcoins over the past 60 days, valued at around $2.75 billion at current prices. This trend began when Bitcoin fell near $60,000, signaling a reversal of the selling pressure that had persisted for several months.
Over $1 Billion in Shorts Liquidated Within an Hour
According to data from crypto analytics platform CoinGlass, more than $1 billion worth of Bitcoin short positions were forcibly liquidated in just about an hour.
Previously, Bitcoin had undergone several weeks of consolidation, repeatedly finding support around $60,000, allowing short positions to accumulate steadily in the market. When the price suddenly broke upward, leveraged shorts faced margin calls or stop-loss pressure, forcing them to buy back Bitcoin to close their positions. This further drove up prices, creating a typical "short squeeze" scenario.
Joshua Lim, Co-Head of Markets at FalconX, noted that trading desks and news headlines in the crypto market had been dominated by selling pressure over the past few weeks, but Bitcoin consistently held near the $60,000 level, after which market sentiment and narratives began to shift.
Axel Rudolph, Chief Technical Analyst at IG, pointed out that the rapid surge toward $70,000 was primarily driven by short covering, reflecting a recovery in buyer confidence.
Policy and Macro News Improve Risk Appetite Simultaneously
On the news front, Trump's meeting with executives from Coinbase Global, Payward, and Blockchain at the White House further heightened market focus on the U.S. digital asset regulatory environment.
At the same time, the U.S. Securities and Exchange Commission proposed this week to exempt certain digital asset issuance projects from securities registration filing requirements. Trump had also previously indicated he would consider suggestions from regulatory bodies for the government to further increase its Bitcoin holdings.
On the macro front, the U.S. Treasury announced an expansion of its Treasury buyback program, stating that liquidity support repurchases for 10- to 30-year securities would "at least double." Following the news, U.S. Treasury yields and the dollar weakened, providing some support to risk assets overall.
Adam McCarthy, Head of Research at crypto liquidity and market data firm LO:TECH, stated, "Shorting Bitcoin had been a relatively clear trade in the market, and the Treasury buyback news served as one of the catalysts prompting renewed capital inflows into risk assets."
