Bitcoin Rallies to $79,400 on Treasury Buybacks, Short Squeeze

Bitcoin surged nearly 24% over the past five trading days, climbing to $79,400 by Friday, August 21, in a dramatic rally driven by a combination of U.S. monetary policy shifts, regulatory developments, and a historic wave of short-position liquidations. The cryptocurrency’s price has risen continuously since breaking through the $69,000 level earlier this week, marking its strongest weekly performance since March 2023.

The primary catalyst identified by analysts was a decision by the U.S. Treasury Department to significantly expand its buybacks of long-dated government debt. The agency doubled its planned operations for long-term bond buybacks from $2 billion to at least $4 billion, a move that pushed the 30-year Treasury yield down sharply from 5.337% to around 5.20% and sent the U.S. dollar index to a three-month low. This action signaled increased liquidity in financial markets, a factor to which bitcoin has historically been sensitive. “Bitcoin is surging because the Treasury has signaled it will do whatever it takes to keep long-end yields from flying up,” noted James Lavish, co-managing partner of Bitcoin Opportunity Fund.

This macroeconomic move was accompanied by...