Bitcoin jumped above $77,000 this week as a Treasury bond intervention and a wave of short liquidations combined to drive its sharpest rally in years. Spot Bitcoin ETFs also swung back to net inflows after a run of outflows earlier in August.
Bitcoin traded at $77,226.96 on Friday, up from $62,836.88 at the start of the week, putting it on track for a weekly gain of around 23%. That would mark its biggest weekly gain since the first week of December 2017, according to technical analysis from ActionForex.
Treasury move and short squeeze fuel the rally
The rally began Wednesday when Treasury yields pulled back sharply after the Treasury's intervention in the bond market, easing pressure on risk assets. Sygnum APAC's Max Stuedlein said the Treasury's decision to double its buybacks of long-dated government debt is aimed at addressing long-term yield concerns tied to rising US debt levels. The move also triggered a short squeeze, with roughly $2.7 billion in crypto short positions liquidated, according to CoinGlass.
Investor sentiment improved further on Thursday amid a last-ditch push from the White House and crypto industry leaders to pass the Clarity Act in the coming weeks. The bill is widely viewed as a key catalyst that could pull the market out of the crypto winter that began last fall, though the chances of it passing appear relatively slim.
ETF inflows return
Spot Bitcoin ETFs also flipped back to inflows this week. The 12 US spot Bitcoin ETFs recorded $600 million in net inflows on August 20, a bigger figure than the previous sessions, following $297.5 million on August 17, $186.4 million on August 18 and $517 million on August 19. IBIT led the latest session with over $500 million in inflows.
That reverses a stretch of weakness: the funds had posted outflows on August 12, 13 and 14 before buyers returned the following week. Bitcoin's move also pushed its market cap above $1.55 trillion, according to 99Bitcoins.
Still below the cycle highs
Token Bay Capital's Lucy Gazmararian told CNBC's "Squawk Box Europe" that crypto is coming to the end of its bear market, labeling Bitcoin trades "a play against monetary debasement." Despite the rally, Bitcoin remains well below its 2026 high of $94,820 hit in mid-January and its all-time high of $126,198 from October 6 last year.
Sources: US Top News and Analysis, ActionForex, 99Bitcoins
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