Bitcoin closes above $77,000 after $3 billion short squeeze

Bitcoin closed above $77,000 after clearing $71,000, with roughly $3 billion in crypto shorts liquidated while futures open interest continued rising, as of Aug. 24.

"The breakout marks a significant shift in market momentum after weeks of consolidation, amplified by a sharp unwind of short positions and renewed institutional participation," Avinash Shekhar, co-founder and chief executive at Pi42, said.

US spot Bitcoin ETFs attracted about $1.92 billion during the week, their strongest weekly performance since October 2025, according to SoSoValue data. BlackRock's iShares Bitcoin Trust (IBIT) accounted for roughly $1.33 billion of that total across five consecutive sessions, per Farside Investors. Bitcoin started the week near $63,000 and briefly crossed $79,000 on Friday, its largest weekly dollar gain on record at about $14,264.

The squeeze cleared leveraged positioning — open interest fell roughly 15 percent and funding rates turned positive — but weak onchain transfer activity leaves questions about how durable the rally is. With the CLARITY Act's procedural vote scheduled for September and the Treasury's expanded buyback program running only through Nov. 4, the next two weeks will determine whether the move was a reset or a turning point.

The $3 billion unwind

The liquidation cascade ran for roughly 18 hours across Aug. 19 and 20, with shorts accounting for about $2.77 billion, or 92 percent, of the $3 billion in forced closures, according to CoinGlass data. Binance absorbed approximately $518 million in liquidations, Hyperliquid roughly $513 million, and Bybit around $303 million. Bitcoin shorts contributed about $1.37 billion of the total, while Ethereum shorts added roughly $1.01 billion.

The trigger was twofold. The US Treasury said it would at least double the maximum size of its liquidity support buyback operations for long-dated bonds to $4 billion per operation, compressing yields and pushing risk assets higher. Hours later, reports emerged that President Trump would host a crypto industry summit at the White House, attended by senior SEC officials and executives from major exchanges.

Ethereum outperformed during the squeeze, gaining roughly 18 percent in a single day — its strongest move since March 2024 — as trading volume on ETH pairs surged 402 percent in 24 hours. Spot Ether ETFs posted about $700 million in weekly inflows, their strongest since October 2025, according to ETF analyst Nate Geraci.

ETF flows turn positive

The $1.92 billion weekly inflow marks a sharp reversal from the uneven flows that defined much of 2026. US spot Bitcoin ETFs remain about $2.91 billion in net outflows for the year, with June accounting for $4.51 billion in withdrawals, per SoSoValue. August has brought $2.38 billion in net inflows through Friday, making it the strongest month so far this year.

IBIT's daily inflows accelerated from $160.2 million on Monday to $503 million on Thursday before easing to $239.3 million on Friday, per Farside Investors. Bloomberg ETF analyst Eric Balchunas described the pattern as a "classic Flipping the Bird pattern," which he viewed as a bullish signal.

The durability question hinges on whether the squeeze created genuine demand or simply cleared weak hands. Open interest has declined roughly 15 percent since the peak, suggesting leveraged positioning has been reduced, but rising futures open interest alongside weak onchain transfer activity points to a market where price gains outpace actual network usage. Ryan Lee, chief analyst at Bitget Research, said the market is in wait-and-see mode over whether political will translates into legal progress, with the CLARITY Act's September vote a key test.

This article is for informational purposes only and does not constitute investment advice.