Bitcoin’s short squeeze pushed prices near $72,000, but mixed on-chain signals and legislative uncertainty leave the rally unconfirmed.
Bitcoin traded near $77,500 on Aug. 21, 2026, after rising nearly 8% at one point the previous day, reaching around $78,000 and breaking a months-long consolidation range. The move was Bitcoin’s largest single-day gain since March. The Kobeissi Letter data cited in that report showed total crypto liquidations of $3.5 billion, with short positions accounting for more than $3 billion.
BREAKING: Crypto markets officially post their 7th largest liquidation event in history, with $3.5 billion in levered positions liquidated in 24 hours.
In 24 hours, crypto markets added +$280 billion in market cap.
That's +$12 billion in market cap per hour for 24 hours… pic.twitter.com/zpEsLeRhp9
— The Kobeissi Letter (@KobeissiLetter) August 20, 2026
The rebound reflected a combination of regulatory expectations, macro liquidity operations and leveraged short covering, according to the report. As prices turned upward, forced buying to cover short positions amplified the upward momentum.
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Bitcoin & Crypto Liquidations, Short Squeeze? How Short Covering Amplified the Rally
Over the trailing 24-hour window, total liquidations reached $3.50 billion, with short liquidations exceeding $3 billion.
Bitcoin liquidations accounted for about $1.76 billion of that total, and Ethereum liquidations were about $1.16 billion. Ethereum rose close to 20% on the day and traded above $2,200 at the time of writing.
Crypto-related equities also strengthened. Strategy rose nearly 12%, while Coinbase, Circle, and BitMine each gained close to 10%.
Source: MSTRUSD / Tradingview
The report identified two broad factors behind the move. The U.S. Treasury announced that it would at least double the single-operation cap for liquidity-support repurchase operations involving 10- to 30-year Treasury bonds, from $2 billion to $4 billion, from Sept. 9 through Nov. 4.
Standard Chartered’s Kendrick characterized the operation as the type of government liquidity intervention from which Bitcoin has historically benefited,
Separately, Trump met with regulatory officials and executives from crypto and fintech companies at the White House. Attendees included SEC Chairman Paul Atkins, CFTC Chairman Michael Selig, and representatives from companies and market infrastructure groups, including Coinbase and Ripple.
Trump said the government had ended its conflict with cryptocurrencies and discussed the possibility of accumulating Bitcoin and other crypto assets, but did not disclose an execution plan, funding sources, or a timeline.
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Bull and Bear Scenarios
A move in the realized profit-and-loss ratio above 2, together with a positive Coinbase Premium Index, would be consistent with the conditions analysts cited for a more durable trend reversal. The $68,500 short-term holder cost basis remains a closely watched level.
Legislative uncertainty remains another consideration. Polymarket data showed the probability of the CLARITY Act passing this year rose from 20% to 28% after Trump’s remarks.
Source: Polymarket
Senate Majority Leader Thune submitted a cloture motion setting a Sept. 15 vote. The vote would determine whether to begin formal debate and requires 60 votes in support; it is not a final vote on the bill.
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