Bitcoin jumped past $69,500 on Wednesday after the US Treasury doubled the size of its buybacks of long-dated government debt, easing pressure from rising yields that had been weighing on risk assets. The rally wiped out about $1.29 billion of short positions, while chart analysts flag a pattern that could point toward $76,000.
Bitcoin surged above $69,500 on Wednesday after the US Treasury doubled its planned buybacks of long-dated government debt. The move brought fast relief to a bond market that had been battered by rising borrowing costs.
Treasury eases pressure on yields
On Aug. 19, the Treasury Department said it will raise the maximum size of its liquidity-support operations for 10- to 20-year and 20- to 30-year securities from $2 billion to at least $4 billion per operation, starting Sept. 9 and running through Nov. 4. As a result, the 30-year Treasury yield fell to about 5.19% from Tuesday's 5.34% peak, its highest since 2007, while the 10-year yield dropped to 4.647%.
Bitcoin climbed from an intraday low near $64,100 to over $69,000, before retracing to around $68,000, as yields retreated and risk assets rallied.
Short sellers get squeezed
The sharp rebound punished traders positioned for further declines. CoinGlass data showed more than $1.2 billion in crypto positions were liquidated within one hour, with Bitcoin accounting for most of the losses. Short traders betting against the rally lost about $1.29 billion during the period.
Over the past 24 hours, over 110,000 traders were liquidated for over $1.45 billion, and the largest single liquidation was a $32 million ETH-USD position on Bitget. Andre Dragosch, Bitwise Europe's head of research, said "the canary in the macro coal mine that anticipates changes in financial conditions" as policymakers respond to pressure in long-duration debt.
Chart pattern eyes $76,000
Bitcoin, which was up 3% since midnight UTC to $68,651.21, was recently changing hands at $66,500, just under the $66,600 neckline of an inverse head-and-shoulders pattern that has been building on the daily chart since the June lows.
A decisive break and hold above the neckline would confirm the pattern and project a measured-move target of $76,000, according to market technician Aksel Kibar of Tech Charts. The structure marks a potential bottom after prices peaked at $126,000 in October last year.
Sources: CoinDesk, CryptoSlate
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