Bitcoin Tops $72k After Largest Single-Day Crypto Short Liquidation In History

Bitcoin surpassed $70,000 for the first time in over two months, propelled by US Treasury Secretary Scott Bessent’s ‘Operation Twist’-like move pushing US bond yields (and the dollar) lower followed by a high-stakes meeting President Trump held with crypto industry leaders.

“When yields drop and the dollar weakens, risk assets tend to rally, and we’ve already seen Bitcoin move higher on the news,” said Jeff Mei, chief operating officer at BTSE.

This morning, bitcoin has extended those gains, tagging $72,000…

And Ethereum has surged back up to $2300…

Which lifted ETH/BTC to its strongest level since the start of the year…

Bitcoin ETFs saw major inflows this week, especially yesterday, “as further proof of how institutional demand for crypto-assets is steadily growing,” said Vladimir Tikhomirov, co-founder of decentralized-finance firm Algebra.

But, probably the most notable feature of the price action of the last 24 hours (aside from its scale) was the unprecedented liquidation of short crypto positions…

Data from CoinGlass shows ongoing crypto short liquidations at $3.1 billion for Aug. 19-20.

Thursday’s tally was largest single-day wipeout of shorts ever recorded.

As CoinTelegraph reports, CoinGlass shows Bitcoin accounting for just over half of the total short liquidations at $1.65 billion.

The numbers do not represent the largest crypto liquidation event if long positions are included. It is dwarfed by the $20 billion long liquidation cascade that followed Bitcoin’s reversal from the most recent all-time high of $126,200 in October 2025.

In US dollar terms, data from CoinMarketCap puts Thursday’s total liquidations in seventh place historically, calculating the day’s long and short liquidations as $3.25 billion.

Rajiv Sawhney, head of international portfolio management at Wave Digital Assets, said yield-curve control “was the second-biggest market catalyst on our bucket list that could potentially supercharge a durable Bitcoin rally.”

The biggest catalyst would be a government mandate to buy Bitcoin for a national reserve, he said.

Bitfire Research notes that this rally was not driven by a single headline, but by a convergence of multiple catalysts: an overcrowded short structure meeting regulatory tailwinds, falling long-end yields, and cross-sector capital rotation.

The most direct trigger came from overcrowded short positions accumulated over six months of consolidation. Bitcoin’s prolonged sideways trading around $60,000 allowed leveraged shorts to pile up. When prices broke through key liquidation clusters, forced buybacks triggered a chain reaction of covering, creating a positive feedback loop that amplified the squeeze.

Importantly, the spot market had already been signaling institutional accumulation before the derivatives squeeze erupted. On-chain data monitored by Bitfire Research reveals that institutional capital — including entities with listed company affiliations and vintage whale labels — had been actively accumulating at the $60,000 level. Confirming this picture, Bitfire Group’s OTC desk posted a record-breaking July, with total trading volume surging 257% month-over-month. These two data streams — on-chain and OTC — point to the same conclusion: institutional spot buying had already picked up significantly before the price breakout, laying the groundwork for the rally.

On the policy front, the SEC unveiled a new digital asset regulatory framework with a safe harbor mechanism: up to $5 million in the launch phase and up to $75 million annually thereafter, with issuers able to exit securities classification upon completing compliance milestones. This sharply reduces compliance uncertainty for early-stage crypto projects, attracting incremental capital to reassess crypto risk pricing.

Macro liquidity also improved. After the 30-year US Treasury yield hit a near two-decade high, the Treasury announced plans to at least double its long-term bond buyback program, pushing the 30Y yield from 5.337% to 5.189%. Gold surged 4.33% in tandem. The decline in long-end yields opened room for Fed policy adjustments, providing liquidity support for high-beta risk assets.
 
On capital rotation, funds that had piled into AI narratives earlier in the year showed signs of returning. With Anthropic’s Q2 revenue growth showing a second-order slowdown, the market began reassessing return expectations across asset classes, and crypto’s relative appeal regained attention.

Additionally, Bloomberg reports that the return of positive sentiment to the crypto market was supported by Trump’s meeting with crypto executives from firms including Coinbase, Payward, and Blockchain.com. The move helped revive optimism around the Clarity Act, a crypto market structure bill that failed to make it to a vote before the Senate’s August recess.

Trump called on Congress to pass a “fair version” of the Clarity Act, telling the crypto and finance executive attendees at the White House that market structure legislation is the next step in his administration’s digital asset agenda.

“Now we need Congress to take the next step by passing the Clarity Act, a fair version of the Clarity Act,” Trump said.

“It’s a very, very powerful structure legislation which will keep us ahead of China, keep us ahead of everyone else. We’ll open the door to the next wave of innovations and innovators.”

The legislation has stalled over a fight regarding ethics provisions. Trump urged the Senate to pass the bill, and the chamber is expected to take it up again when it returns in mid-September.