Bitcoin broke through $81,000 early Tuesday before easing back, extending a rally that began last week alongside U.S. Treasury bond buyback plans. Short sellers absorbed the bulk of the pain, while spot bitcoin ETFs kept pulling in fresh cash and Stanley Druckenmiller blasted the Treasury's intervention as a policy error.
Bitcoin peaked at $81,255 at 10:45 p.m. EST on Aug. 24 before retreating to consolidate above $80,500. The jump of more than 4% lifted bitcoin's market capitalization to nearly $1.62 trillion and narrowed its year-to-date losses to 8%.
Short sellers take the brunt of the squeeze
The move triggered another short squeeze against traders betting against bitcoin. Coinglass data showed the price action wiped out $177 million in short bets in four hours, compared with $4.5 million in long bets, pushing 24-hour short liquidations to $282 million — about 62% of all liquidated short positions across crypto. The rally extends a surge that began last week, when bitcoin gained more than 20% in three days, its biggest three-day gain since 2023, a move fueled partly by a short squeeze that liquidated more than $4 billion in bearish crypto positions.
Treasury's bond buyback plans divide Wall Street
The gains followed the U.S. Treasury's move to tap its nearly $1 trillion general account to fund bond buybacks, which pushed 10-year yields down to 4.704% and the 30-year yield to 5.234%. However, Stanley Druckenmiller sharply criticized the intervention, writing that "This wasn't liquidity management, it was price management" and calling it a mistake far larger than the sums involved.
ETF inflows and other tokens join the rally
Institutional demand has also returned. U.S. spot bitcoin ETFs attracted $1.92 billion in net inflows last week, their largest weekly haul since October. Fundstrat said in a Monday note that the buying suggests the rally could outlast a tactical bounce. Ether last traded 0.79% higher at $2,489.01, while XRP rose 1.1% to $1.49, up about 50% over the past seven days.
Bitcoin still must navigate this week's PCE inflation data and Fed Chair Kevin Warsh's Friday speech at Jackson Hole, both flagged as potential sources of volatility.
Sources: CNBC, Bitcoin.com, AMBCrypto
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