Bitcoin approaches US$72,000, short losses exceed US$3 billion in two days

Bitcoin exceeded US$72,000, and the scale of short clearing reached a record high.

On August 20, the trading price of Bitcoin was close to US$72,000. The rise for two consecutive days made the scale of clearing short positions in cryptocurrency exceed US$3.1 billion. The volatility stems from a liquidity decision by the U.S. Treasury Department that changed market sentiment for risky assets this week.

CoinGlass data shows that between August 19 and 20, the total amount of short clearing in the cryptocurrency market reached US$3.1 billion. Among them, the single-day liquidation volume on the 20th hit a record high, and Bitcoin contributed US$1.65 billion, accounting for more than half of the total.

As of press time, the trading price of Bitcoin was US$71924, an intraday increase of more than 11%. It previously hit a local high of US$71992 on the Bitstamp exchange, setting a new high since early June. Ethereum, Solana and XRP all recorded double-digit gains, and HYPE rose more than 22%.

Calculated in dollar terms (not limited to short positions), CoinMarketCap data showed that the total amount of clearing long and short positions on the 20th was US$3.25 billion, ranking seventh in historical clearing days. This figure is far lower than the $20 billion long liquidations triggered by Bitcoin's decline from its historical high of $126,200 in October 2025.

Triggers for the rally

The rally dates back to a statement from the U.S. Treasury Department on August 19. The department said it would at least double the size of debt repurchase operations from September 9, from $2 billion to a minimum of $4 billion each time.

Debt buybacks are equivalent to the government becoming a buyer in the long-term bond market. The news pushed the 30-year Treasury yield down 9 basis points to 5.19%, a day after it hit a nearly 20-year high. Bitcoin rose 6%, breaking through $69700 for the first time since June.

Analysts believe that the repurchase is a technical exercise rather than debt reduction. Relevant sources pointed out that this is only an adjustment by the Ministry of Finance to the maturity structure and is not a real debt repayment behavior. The statement came as U.S. Treasuries approached $40 trillion and interest expenses in the past year reached $1.4 trillion, three times the 2020 level.

Markets view the repurchase as a liquidity signal, similar to previous situations where central bank or government intervention to boost asset prices. Affected by this news, the stock market rose in sync with Bitcoin.

Short traders were caught off guard

The scale of short clearing reflected a large number of traders who had previously bet that Bitcoin would continue to fall. Since peaking in October 2025, Bitcoin prices have been under pressure for several weeks, and the market has accumulated a large number of bearish positions. When Bitcoin suddenly reversed, these short positions were forced to close, further exacerbating price volatility.

This mechanism, known as "short squeezing," usually amplifies two-way price fluctuations. Forced buying caused by short traders closing loss positions adds real buying pressure to natural demand, which may cause prices to exceed reasonable levels supported by fundamentals.

Bitcoin holders leave the market at profit for the first time in months

This round of gains also gives short-term bitcoin holders the opportunity to exit positions that have been losing money for weeks. CryptoQuant data showed that the wallet that had held Bitcoin for less than 155 days on the 20th sent a record 43300 bitcoins to the exchange for profit-taking, the largest such operation since 2026.

This group's spent output profit ratio reached 1.01, the highest since April. A ratio above 1 means that most of the transferred bitcoins are profitable relative to the previous transaction, reversing the previous situation in which many short-term holders suffered unrealized losses.

It has been previously reported that the average cost of holding a position for this group is approximately US$68700. Analysts have warned that a large number of investors near the break-even point could limit a price rebound, as holders will rush to sell once costs are recovered. The price trend on the 20th allowed Bitcoin to easily break through this level, providing space for these holders to leave.

Future Outlook

The combined effect of short squeeze and profit-taking by short-term holders explains most of the price volatility, but does not address potential liquidity concerns raised earlier this week. Since May, the exchange's stablecoin supply has dropped by US$14 billion, and the stablecoin supply ratio has climbed from 9.82 to 11.69 since June 30.

Higher SSR readings mean less stablecoin funds are available for purchase on exchanges. Relevant analysis points out that if the supply of stablecoins does not improve, the rebound may rely on weak liquidity rather than new funds. This has raised questions about whether the current rally is sustainable or whether short positions are simply short-term unwinding.

Some analysts pointed out that if the U.S. Treasury's repurchase program continues to support risky assets, Bitcoin is expected to hit the target of US$100,000. Whether Bitcoin can hold itself above $70,000 in the next few days will largely depend on whether new demand replaces the short covering forces that have driven this week's gains.