Bitcoin exploded within two days: this is the trigger that ignited the market

Anyone observing the crypto market at the beginning of the week might have thought that Bitcoin was still stuck in a weak market. A few days later, the picture turned completely around. Bitcoin surged by more than 20% within about two trading days, crossed the $77,000 level on Friday, and even touched the $79.4 thousand area, its highest level since May. In the weekly summary, it recorded an increase of more than 22%, one of its strongest weeks in recent years.

Ethereum also joined the move with a jump of more than 25%. This rise serves as an almost perfect example of how a relatively small macroeconomic trigger can meet a market loaded with short positions and create a chain reaction.

The event that started the move came from a place that most crypto investors do not look at on a daily basis: the US Treasury. After a period of unusual pressure in the long-term bond market and a rise in yields, the US Treasury announced an increase in the scope of the long-term government bond buyback program. In some operations, the ceiling is expected to rise from about $2 billion to about $4 billion. It is important to emphasize that this is not quantitative easing (QE) in the classic sense. The Federal Reserve is not printing money to buy bonds, and the stated goal of Treasury Buybacks is to improve the liquidity and functioning of the bond market.

The Treasury had operated a buyback mechanism before, but the market looked beyond the technical definition. Investors saw an American government intervening to calm pressure in the debt market precisely at a time when the national debt, the deficit, and financing costs continue to raise concerns. The dollar weakened, the pressure on the bond market changed, and assets perceived as an alternative to government currencies, primarily gold and Bitcoin, surged together.

Before the rise, the crypto market was full of traders who bet that the declines would continue. When Bitcoin started to climb, short sellers were forced to close their positions. To close a short on Bitcoin, one must buy Bitcoin, which pushed the price even higher. The rise triggered stop-losses and liquidations of additional shorts, creating a snowball effect. According to market reports, bearish positions worth billions of dollars were liquidated during the move. This explains why Bitcoin did not settle for a normal 2-3% rise, but moved within a short period from the mid-$60,000 area to over $77,000. The rise looked almost vertical because even those who bet against it were forced to become buyers.

However, a short squeeze alone is not enough for a sustained trend. This time, the market received two more support engines. The first was the return of institutional money; more than a billion dollars flowed within just two days into Bitcoin-related ETFs. The second engine came from the White House. President Donald Trump returned and called on Congress to advance the CLARITY Act, which is intended to create a clearer regulatory framework for the digital asset market. The law still faces political obstacles in the Senate, but the very fact that the President continues to exert public pressure for its advancement provided the market with a signal that the US administration views the crypto industry as a field it wants to foster.

When Bitcoin rises with such intensity, connected stocks tend to move even more. Bitcoin miner Canaan's stock surged by more than 25% on Friday. MicroStrategy, which holds more than 20,000 BTC, jumped by more than 16%, and Japan's Metaplanet also recorded a double-digit increase. On Wall Street, Coinbase rose by about 8.2%, and Robinhood surged by about 14%. The stock market treats some of these companies as a kind of leveraged exposure to the coin's price.

One of the most prominent symbols of the move was MicroStrategy. The company currently holds about 840,447 Bitcoins, purchased at an average price of about $75,385 per Bitcoin. When Bitcoin returned above $75.4 thousand, the company's huge portfolio moved back above its average purchase price. At levels of $77-79 thousand, MicroStrategy again found itself with an unrealized profit of billions of dollars on paper, which eased concerns regarding the aggressive treasury model built by Michael Saylor.

The macroeconomic background is also reinforced by experts. Bridgewater founder Ray Dalio warned of a possible US debt crisis and called on investors to prefer assets like gold and combine some Bitcoin over excessive exposure to government debt. While Dalio still clearly prefers gold, bringing Bitcoin into the same conversation about protection against fiscal risks is a significant change.

Standard Chartered also became more optimistic. Geoff Kendrick, head of digital asset research at the bank, said that for the first time this year, there is a risk that his year-end forecast of $100,000 for Bitcoin is actually too low. According to him, Bitcoin may return and test the all-time high in the $126,000 area before the end of the year, especially if the money flows into the ETFs continue to recover. However, it is worth separating a forecast from a fact. A large part of the recent jump came from the liquidation of shorts. For Bitcoin to go from $79,000 to $90,000, $100,000, and perhaps back to the peak, the market will need to receive something else: real and sustained demand. The ability of Bitcoin to hold the breakout levels after the short squeeze is over is the test that is starting now.

As of Tuesday evening, August 25, Bitcoin was trading in the $79,000 area. The euphoria has cooled slightly, but a large part of the weekly rise has been maintained. If Bitcoin manages to establish itself above the $70-75 thousand area and continue to receive institutional capital inflows, the last week may be remembered as the moment when the downward trend was broken. If the money flows disappear, volatility could return very quickly.