Bitcoin Reclaims $70,000 as Treasury Buybacks and Short Squeeze Lift Market

Treasury Buybacks Push Yields Lower and Improve Liquidity

The first major catalyst came from the U.S. Treasury, which said it would at least double its long-duration bond buybacks from $2 billion to $4 billion per operation beginning Sept. 9, 2026. Treasury Secretary Scott Bessent was identified with the expanded program, which traders viewed as a potential liquidity backstop for the more than $30 trillion Treasury market.

The announcement pushed long-end yields lower and weakened the dollar. The 30-year Treasury yield had reached 5.337%, its highest level since 2007, before falling as the liquidity outlook shifted. Lower yields reduce the opportunity cost of holding non-yielding assets such as Bitcoin, while a softer dollar makes dollar-denominated assets less expensive for buyers using other currencies. The combination had already been labeled “QE Lite” in the market commentary cited in the source material.

Those financial-condition changes preceded the most aggressive phase of the crypto rally. Bitcoin broke through levels that had constrained it through much of the summer, while forced buying from short liquidations began to add momentum to the move.

Short Liquidations Accelerate Bitcoin's Rally

Liquidation data showed a sharp rise in losses for traders positioned for additional declines. One intraday snapshot recorded $1.23 billion in crypto short liquidations within a single hour.

One Hyperliquid trader lost an entire 1,800 BTC short position valued at about $117 million. The forced closures added buying pressure because short positions had to be unwound as prices rose, accelerating a rally that had begun with changing Treasury-market conditions.

Crypto-linked equities followed the move. Strategy gained nearly 12%, Coinbase rose 9%, and Circle and BitMine each advanced roughly 9% to 10% during the session.

Major cryptocurrencies also posted broad gains in one contemporaneous market snapshot.

Ether's percentage advance was more than twice Bitcoin's in that snapshot, showing that the move extended beyond the Bitcoin short squeeze into other large digital assets.

Trump Pushes CLARITY Act and Discusses Bitcoin Purchases

Washington added another catalyst later in the session. President Donald Trump addressed crypto and technology executives at a White House gathering on Aug. 19 and urged Congress to advance U.S. crypto market-structure legislation.

Trump said lawmakers needed to “take the next step” and approve a “fair version” of the Digital Asset Market Clarity Act. Coinbase, Gemini, Ripple and Chainlink Labs were among the crypto companies represented at the event. Trump also urged lawmakers to pass the CLARITY Act and said the United States should remain the “undisputed leader” in digital assets.

Legislative developments were already giving traders a concrete timetable. Senate Banking Committee Chairman Tim Scott said at the SALT conference on Aug. 18 that the CLARITY Act had a good chance of advancing in September. A procedural Senate vote was scheduled for Sept. 15, with lawmakers still working through disagreements involving crypto rewards, decentralized finance and ethics provisions.

A separate SEC proposal aimed at easing registration requirements for some digital-asset offerings also coincided with the rally, adding another U.S. regulatory development to a session already dominated by Treasury liquidity and market-structure headlines.

Trump also raised the possibility of active U.S. government Bitcoin accumulation. Asked about a sizable government purchase, Trump said: “It's been talked about. It's been very, very good for the dollar. If you came in with recommendations, I would certainly listen.”

The distinction is material because the Strategic Bitcoin Reserve created in March 2025 was built from government-seized Bitcoin rather than open-market purchases. A new government acquisition would therefore differ from retaining Bitcoin already held through seizures.

Trump's remarks did not constitute an announced purchase. His statement established that a sizable acquisition had been discussed and that he would consider recommendations, while the source material contained no completed government transaction.

Fed Minutes Leave Inflation Risk Intact

Federal Reserve minutes from the July meeting provided a more mixed backdrop. Most officials supported leaving rates unchanged, while several favored an increase and many believed tighter policy could become necessary if inflation failed to cool.

Three officials were identified as known dissenters favoring a hike. The minutes said inflation “remained elevated,” but the release did not reveal a stronger hawkish push beyond those dissents. Market-implied odds of a September rate hike fell to 34%, while the dollar weakened.

Most Federal Reserve officials expected inflation to ease through the end of 2026 as the effects of tariffs and earlier energy-price increases faded. Officials nevertheless continued to see inflation risks as tilted to the upside, leaving the possibility of tighter monetary policy hanging over Bitcoin's breakout.

The Fed minutes therefore did not provide the same direct support as the Treasury buyback announcement. They instead avoided introducing a larger hawkish surprise while other catalysts were already driving crypto prices higher.

Prediction Markets Reverse After Traders Lean Bearish

Prediction markets showed how heavily traders had leaned toward additional Bitcoin weakness before the rally. One market asked whether Bitcoin would next reach $84,000 or fall to $55,000 and had put roughly 70% probability on the bearish outcome only days earlier.

By Wednesday afternoon, the probabilities had nearly converged, with the $55,000 outcome at 51.9% and the $84,000 outcome at 48.1%.

Other markets had also entered the session cautiously.

Bitcoin exceeded both August thresholds during the Wednesday rally. Short-term prediction markets moved sharply after the squeeze, while the year-end markets showed less movement. Prediction markets had also been setting trading-volume records as more traders used them to hedge market positions.