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DeepChain Summary: This week, Bitcoin rose over 24%, breaking above $78,000 to record its best weekly performance since March 2024. The rally accelerated following a series of pro-crypto signals from Washington, then further fueled by forced liquidations of short positions. According to CoinGlass data, approximately $2.74 billion in crypto short positions were liquidated within 24 hours, marking the largest short squeeze on the platform since records began in 2021. Key drivers included the SEC’s token issuance exemption proposal, progress on the CLARITY Act, Trump’s mention of Hyperliquid, and the Treasury’s expansion of long-term Treasury buybacks.
This week, Bitcoin started from around $63,000, peaking near $79,500, and closed the weekly candle above $77,000, posting a weekly gain of over 24%. Multiple databy some measures, one of the largest weekly gains in recent years
Rose over 24% in a single week, marking its best performance in recent years.
The market movement is not an isolated technical rebound. Previously, the market had been trading sideways near $60,000 for several weeks, with volatility compressed to multi-year lows and a dense cluster of short liquidation zones accumulating above. Once the price broke through, forced buying from liquidations rapidly amplified the upward move.
In the same week, the U.S. Department of the Treasury announced it would at least double the size of liquidity support repurchase operations for 10- to 20-year and 20- to 30-year Treasuries, increasing the maximum per operation from $2 billion to at least $4 billion, effective September 9. This move helped lower long-term U.S. Treasury yields from near 19-year highs and improved expectations for liquidity in risk assets, becoming one of the macroeconomic catalysts for the market rally.
$2.7 billion in short liquidations set a new record on CoinGlass.
What truly accelerated the rally was a short squeeze. According to CoinGlass data, approximately $2.74 billion in crypto short positions were liquidated within 24 hours during the rapid price surge, marking the largest short liquidation event on the platform since records began in 2021. Total liquidations neared $3 billion, with shorts accounting for about 92% and longs only around $257 million—a ratio exceeding 10:1.
Bitcoin short liquidations totaled approximately $1.4–1.7 billion, while Ethereum reached about $1.13 billion. The largest single liquidation was a $48.8 million Bitcoin short position on Hyperliquid. At the start of the move, over $1 billion in Bitcoin shorts were liquidated within approximately one hour.
The market had widely anticipated a price decline, leading to a buildup of leveraged short positions. After policy signals and macroeconomic liquidity expectations shifted, short sellers were forced to cover their positions, triggering a self-reinforcing upward cycle.
The SEC proposes a token offering exemption.
On August 18, the U.S. Securities and Exchange Commission (SEC) proposed a new framework, “Regulation Crypto Assets,” aimed at streamlining the process for crypto projects to sell tokens to the public.
The proposal includes two exemptions: the startup exemption permits raising up to $5 million over four years; the fundraising exemption allows for annual fundraising of up to $75 million (in two tiers), subject to principles-based disclosure and financial reporting requirements. Additionally, a conditional safe harbor is established, allowing certain tokens to no longer be considered investment contracts—and thus exit the scope of securities regulation—after the issuer ceases key managerial efforts.
The public has a 60-day comment period. The market generally interprets this as Washington lowering the barrier for crypto companies to operate legally in the U.S.
The CLARITY Bill has stalled, and the CFTC Chair has signaled intent to move forward independently.
The broader framework remains stalled in Congress. The CLARITY Act seeks to clarify which aspects of crypto assets fall under securities regulation and which fall under commodities regulation: securities and crypto financing are primarily overseen by the SEC, while digital commodities trading grants the CFTC broader jurisdiction and establishes a legal framework for U.S. crypto exchanges to operate.
The bill stalled before the Senate’s August recess, with procedural votes potentially delayed until mid-September. On August 20, CFTC Chair Michael Selig stated that if Congress continues to delay due to Democratic filibusters, the CFTC will swiftly use its existing authority to establish regulations for the crypto asset market. “We will respond to President Trump’s call by building a digital asset market structure that crypto opponents cannot easily overturn.”
Trump names Hyperliquid for “compliant entry into the U.S.”
The day before, Trump stated at the White House during a meeting with crypto executives that CFTC Chair Seelig is working to bring the crypto exchange Hyperliquid, which currently blocks U.S. users, into the United States in a “fully compliant and legal” manner. Following the announcement, Hyperliquid’s native token, HYPE, surged by as much as 20% to 30%.
In conjunction with the SEC proposal, investors believe Washington is taking steps to make it easier for crypto companies and markets to operate legally in the U.S. These signals emerged when the market had expected a decline, directly acting as a catalyst for a short squeeze.
As of press time, Bitcoin remains range-bound at elevated levels. Key areas of focus will be whether policy expectations can be translated into sustained capital inflows and how positions are rebuilt following short liquidations.
Source: www.kucoin.com