Bitcoin jumps above $68,000 as $1.7 billion in short bets liquidated
Bitcoin surges past $68,000 after bond market move
Bitcoin climbed above $68,000 on Wednesday, its highest level in weeks, after the U.S. Treasury announced it would double the size of its long-dated bond buybacks. The move triggered a sharp rally in crypto markets, forcing $1.7 billion in short bets to close.
Ether, the second-largest cryptocurrency, rose 9% to $2,086. The total value of all cryptocurrencies increased by 5.1% to $2.41 trillion. Trading volume reached $75.7 billion in 24 hours.
Key numbers from the rally
- Bitcoin price: $68,605 (up 5.8% in 24 hours)
- Ether price: $2,086 (up 9%)
- Total crypto market value: $2.41 trillion (up 5.1%)
- Short liquidations: $1.74 billion (91% of total liquidations)
- Total liquidations: $1.91 billion in 24 hours
- U.S. spot bitcoin ETFs: $297.5 million inflows on Aug. 17, $189.3 million on Aug. 18
Why the Treasury’s bond buyback triggered the rally
The U.S. Treasury said it would at least double the size of its buybacks of long-dated debt, increasing the maximum size from $2 billion to $4 billion per operation. The change takes effect on September 9 and will run through November 4.
The Treasury stated this was to "provide greater liquidity support in longer-dated nominal sectors." The 30-year Treasury yield fell from 5.285% to 5.21% after the announcement, its lowest level since mid-August.
The bond market reaction did not immediately spill over into crypto. Bitcoin traded sideways for about three hours before surging from $65,888 to $68,529 between 11 a.m. and noon ET.
Short sellers hit hardest by sudden price move
Of the $1.91 billion in liquidations, $1.78 billion occurred within a four-hour window. Short positions made up $1.74 billion of the total, while long positions accounted for $173 million. A total of 122,893 traders were liquidated.
Bitcoin shorts accounted for $1.10 billion of the liquidations, while ether shorts made up $463 million. The largest single liquidation was a $48.8 million bitcoin position on the exchange Hyperliquid.
By exchange, Binance saw $530 million in liquidations, Hyperliquid $513 million, and Bybit $303 million in the same four-hour period.
What is confirmed about the market reaction
- The U.S. Treasury announced it would double long-dated bond buybacks starting September 9.
- Bitcoin and ether prices rose sharply, with bitcoin reaching $68,605 and ether $2,086.
- $1.91 billion in leveraged positions were liquidated, with $1.74 billion coming from short bets.
- U.S. spot bitcoin ETFs saw inflows of $297.5 million on Aug. 17 and $189.3 million on Aug. 18.
- Ether futures open interest rose 7.4% to $28.4 billion, while bitcoin futures open interest increased 5.4% to $52.2 billion.
What is still unclear
- The exact reason for the three-hour delay between the Treasury announcement and the crypto market rally.
- Whether the rally will continue or if traders will quickly re-establish short positions.
- How the Federal Reserve’s upcoming decisions might affect the market, as traders currently price in a 28.5% chance of a rate hike in September.
Why this matters for crypto traders
The sharp rise in bitcoin and ether prices shows how sensitive crypto markets are to changes in traditional financial markets, particularly U.S. Treasury policies. The massive liquidation of short positions also highlights the risks of betting against the market when sentiment can shift quickly.
The inflows into U.S. spot bitcoin ETFs suggest renewed interest from institutional investors. The increase in futures open interest indicates traders are re-entering the market, though funding rates remain modest, showing no immediate sign of overcrowding in long positions.
