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<a href="https://xpertsstudio.com/bitcoin-btcusd-is-up-2-91-on-aug-21-key-drivers-to-watch/” title=”Bitcoin (BTCUSD) Is up 2.91% on Aug 21: Key Drivers to Watch”>Bitcoin (BTC) extends gains, trading above $77,000 on Friday after rallying over 20% and reaching its highest level since mid-May. Crypto markets continue to cheer the US Treasury’s decision to double its debt buyback operations, posting their 7th-largest liquidation event in history. Rising demand from institutional investors supported the rally as well, with spot Exchange Traded Funds (ETFs) set to record the highest weekly inflow year-to-date this week, hinting at further lift to the ongoing Crypto King’s rally.
Liquidity boosts trigger massive short liquidations
The US Department of the Treasury announced on Wednesday that it will double the size of some of its buyback operations aimed at supporting liquidity in the longer-dated Treasury securities market.
Reuters reported that the Treasury will increase liquidity support buybacks for longer-dated nominal coupon securities from $2 billion to at least $4 billion per operation.
The increased Treasury buyback operation boosted risk appetite because it signaled improved liquidity conditions, a key factor for Bitcoin and cryptocurrencies in general. The announcement led to a short squeeze across the crypto market, with BTC surging more than 7% after the news on Wednesday and continuing its rally to reach the highest level in three months.
This massive price spike triggered crypto markets’ seventh-largest liquidation event in history, with $3.5 billion in leveraged positions wiped out in 24 hours
The overall crypto market added $210 billion in market cap so far this week, with total cap reaching $2.45 trillion on Friday.
“I expect the rally to have some near-term room to run, but a 20% move is unlikely to be sustained by the Treasury buyback announcement alone,” Bitunix Analyst Dean Chen told FXStreet in an exclusive interview.
Chen added that the Treasury’s decision to at least double long-end buybacks to $4 billion per operation has helped ease long-term yields and financial conditions, giving Bitcoin a strong liquidity-driven boost.
“However, I would view this as the first stage of a valuation recovery rather than confirmation of a new bull market. If the US Dollar continues to weaken, long-term yields remain contained, and ETF inflows strengthen, Bitcoin’s rally can extend. But if the initial optimism fades and investors refocus on the underlying fiscal deficit and structurally high Treasury yields, the rally could lose momentum fairly quickly,” Chen said.
Highest ETF weekly inflow year-to-date
Institutional demand for Bitcoin supported this week’s price surge. SoSoValue data showed spot ETFs are set to record the highest weekly inflow year-to-date with $1.61 billion in gains through Thursday. Renewed institutional interest reflects growing demand for BTC and supports its price outlook.
Falling Greenback supports BTC
Traders have also scaled back their expectations for an immediate Federal Reserve (Fed) rate hike after last week’s US inflation data showed signs of cooling price pressures.
The shift in rate expectations has weighed on the US Dollar (USD), which remains near a three-month low this week. A weaker Greenback is supporting Bitcoin, as easing Fed rate expectations reduce Treasury yields and improve demand for risk assets such as BTC.
Oil surge and rate-hike fears weigh
Market participants, however, remain concerned about renewed inflationary pressures stemming from higher Oil prices, with the US-Iran standoff over the Strait of Hormuz adding to supply risks.
Yemen’s Iran-backed Houthi militant group claimed to have targeted eight Oil tankers since declaring a maritime blockade on Saudi shipping in late July, raising the risk of a broader regional conflict and lifting Oil prices to a three-week high this week.
In the latest developments surrounding the Middle East crisis, President Donald Trump said on Wednesday that the US will launch the “most crushing economic operation” against Iran. Furthermore, Trump threatened to impose severe penalties on any nation that helps Tehran evade sanctions or does business with Iran. Adding to this, Vice President JD Vance said that economic pressure is the most effective tool against Iran and US Treasury Secretary Scott Bessent said the US will impose the “toughest ever” sanctions on Tehran.
Meanwhile, Minutes from the July 28-29 FOMC meeting, released on Wednesday, showed Fed officials said they may need to raise interest rates soon unless inflation comes down further.
These developments and persistent geopolitical uncertainties keep the risk premium in play. Higher energy prices could keep inflationary pressures elevated, limiting expectations for Fed easing and supporting US Treasury yields, while capping Bitcoin’s near-term upside.
Bitcoin technical outlook: Highest weekly gains since February 2024
Bitcoin price gained over 20% this week so far, reaching its highest level since mid-May and trading above $77,000 on Friday. The Crypto King pushed sharply above the 200-week Simple Moving Average (SMA) at $64,289 after weeks of consolidation since mid-July.
If BTC closes above the immediate resistance at the 61.8% Fibonacci retracement level at $78,490 (drawn from the August 2024 low of $49,000 to the October 2025 record high at $126,199) on a weekly basis, then BTC could extend the rally toward the 50-week SMA at $81,821.
Momentum remains strong and shows signs of optimism. On the weekly chart, the Relative Strength Index (RSI) moved above the neutral level of 50, reading 56 on Friday after staying below the neutral value since early November 2025, indicating improving momentum. In addition, the Moving Average Convergence Divergence (MACD) flipped to a bullish crossover in mid-July and remains intact, with rising green histogram bars, supporting a positive outlook.
Traders should remain cautious, as such a massive rally suggests a mild pullback or consolidation is possible before the upside move continues. If BTC corrects, it could extend the decline toward the key psychological level of $70,000.
On the daily chart, the Crypto King is maintaining a bullish near-term bias as price holds well above the 50-day, 100-day, and 200-day Exponential Moving Averages (EMAs), clustered between roughly $65,400 and $71,500.
The strong advance is backed by overbought momentum, with the daily RSI at 85 (deeply overbought levels) and the MACD deeply positive, suggesting an extended but still powerful uptrend that could be vulnerable to a cooling phase.
On the topside, immediate resistance is seen at the psychological $80,000 level, followed by a daily resistance barrier at $84,739.
On the downside, initial support sits at the 200-day EMA near $71,532, with additional demand expected around the 100-day EMA at $66,784 and the horizontal level at $66,500; deeper pullbacks would likely target the 50-day EMA at $65,403 and the structural floor at $62,300.
(The technical analysis of this story was written with the help of an AI tool.Know more.)
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin’s market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
Manish Chhetri is a crypto specialist with over four years of experience in the cryptocurrency industry.
Source: www.fxstreet.com