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(Aug 20): Bitcoin’s bruised market suddenly sprang back to life, surging nearly 8% and unleashing the biggest wave of short liquidations in records going back to 2021.
More than US$1 billion (RM4.04 billion) of bitcoin short positions were liquidated in about an hour, according to data from Coinglass, underscoring the speed of Wednesday’s reversal that pushed the largest cryptocurrency to around US$69,500, its highest since early June and its biggest gain since March. Across crypto tokens, a record US$2.7 billion in bearish bets were wiped.
Bitcoin held its gains in Asia on Thursday, trading around US$69,450 at 1pm in Singapore.
The upswing came as US President Donald Trump met with crypto executives from firms including Coinbase Global Inc, Payward Inc and Blockchain.com Group Holdings Inc at the White House, adding to optimism around an administration that has sought to promote a more industry-friendly regulatory framework for digital assets. Falling borrowing costs added another tailwind.
“The move towards US$70,000, triggered by short-covering, suggests buyers are regaining confidence, although the rally now faces a crucial test of whether it can sustain momentum and challenge the US$75,000 region,” said Axel Rudolph, chief technical analyst at investing and trading platform IG.
The size of the move is also a sign of how one-sided the market has become. After months of selling and a descent into the low US$60,000s, bearish positioning had piled up in an asset with a long history of overshooting in both directions. Once prices turned higher, forced buying from short sellers helped accelerate the rebound, producing the kind of abrupt snapback that frequently follows prolonged, one-way moves in crypto.
The White House meeting took place after the Securities and Exchange Commission proposed this week to exempt certain digital-asset offerings from securities registration statements as the regulator moves ahead with its crypto agenda after landmark legislation stalled in Congress. The agency said the exemptions are intended to help companies at the startup and fundraising stages of their growth.
Trump also said Wednesday he would consider regulators’ recommendations on additional government bitcoin acquisitions, though an existing executive order already directs the Treasury and Commerce departments to develop budget-neutral strategies for acquiring more.
“Crypto trading desks and market headlines have been inundated by sellers in the last few weeks,” said Joshua Lim, co-head of markets at FalconX. “Despite that, price action held very firm in the low US$60,000s, which turned into a sentiment and narrative shift.”
The rally spread across digital tokens and lifted bitcoin above its 100- and 200-day moving averages, technical gauges closely watched by traders. Ether jumped 16%, the biggest one-day gain since May last year. It climbed a further 1.5% in Asia Thursday to US$2,250.
In the bitcoin options market, traders had built protection around US$60,000 while positioning for a rise toward US$70,000, with open interest concentrated in puts and calls around those respective strike prices, according to crypto exchange Deribit.
Bitcoin spot US exchange-traded funds recorded US$517 million in net inflows yesterday, the most since May.
Treasury boost
US Treasury Secretary Scott Bessent made a fresh attempt to rein in long-term borrowing costs from multiyear highs, sending Treasury yields and the dollar lower and improving the backdrop for higher-risk assets.
Just two weeks after releasing its planned schedule for buybacks this quarter, the Treasury Department on Wednesday said it’s “increasing, by at least double, the size of liquidity support buyback operations” for securities dated from the 10-year to the 30-year sector.
“Bitcoin short was a conviction trade over the last few weeks, but the news today from the Treasury in the US has obviously triggered a confidence-induced rush into risk assets like BTC,” said Adam McCarthy, head of research at crypto liquidity and market data firm LO:TECH.
Shares of crypto-focused companies also rallied. Coinbase — the US digital trading platform — jumped 10%, bitcoin accumulator Strategy Inc increased 13% and stablecoin issuer Circle Internet Group Inc surged almost 10%.
The crypto market structure legislation, known as the Clarity Act, has stalled in the US Senate amid a fight between Democrats and Republicans over ethics provisions spurred, in part, by Trump’s own involvement in the digital-assets sector.
For bitcoin, the immediate test is whether Wednesday’s forced buying gives way to genuine demand. The short squeeze showed how stretched the downturn had become. It also showed that after months in which nearly every sharp move seemed to point lower, crypto’s capacity for sudden, self-reinforcing reversals remains intact.
Source: theedgemalaysia.com