Bitcoin (BTC) rises above $75,000, a $3 billion short squeeze drives gains

Bitcoin breaks through $75,000, a $3 billion short squeeze drives gains

Bitcoin climbed above $75,000 on Friday, extending its strongest rally in months. As regulatory sentiment improves, bond yields fall and a $3 billion short squeeze drives prices higher, the flagship cryptocurrency is on track to record its best weekly performance in more than two years.

Bitcoin surged more than 7% on Wednesday, and rose another 5.36% on Thursday, decisively breaking through the US$70,000 mark and closing at US$73,011. During Friday's trading session, prices continued to rise 3.42% to $75,411.

Short squeeze and macroeconomic headwinds boost Bitcoin's gains

In the past 24 hours, Bitcoin prices have risen nearly 8%, and the cumulative increase this week is close to 20%. It is expected to hit the highest weekly gain in more than two years. The broader cryptocurrency market also moved higher, with Ethereum up nearly 5%, Ripple up 17%, and Solana up more than 5%. 24-hour trading volume rose to US$137.28 billion, and the overall cryptocurrency market value rose 6.79% to US$2.53 trillion. The most obvious indicator of the shift in market sentiment is the Fear and Greed Index, which jumped to 69, firmly in the "greedy" range.

The rally began on Wednesday, when the U.S. Treasury Department announced it would double the size of repurchase operations for 10-to 20-year and 20-to 30-year nominal bonds from $2 billion to $4 billion each time. Before the announcement, the 30-year bond yield hit 5.337%, the highest level since 2007. After the announcement, the yield fell to 5.192%. The impact of these repurchase operations on the market was almost immediate, improving liquidity conditions across the market. Rachel Lucas, an analyst at BTC Markets, said: "The real driver was the U.S. Treasury's doubling of long-term bond buybacks, which lowered long-term yields and broadly boosted risk appetite. Nothing has changed Bitcoin's long-term prospects, but it has not changed its volatility."

After meeting with top crypto industry executives, President Trump again called on Congress to advance the Clarification Act, which also boosted market expectations for a favorable regulatory environment in the United States.

Spot Bitcoin ETF may determine subsequent trends

At the same time, some analysts believe that ETF and spot demand will play an important role in determining whether this breakthrough can be sustainable. Nikolai Sundgaard, senior research analyst at Nansen, said that while forced short covering has driven Bitcoin's rise, rising institutional demand and improving liquidity conditions have put the market on an upward trajectory. Sundgaard emphasized that open interest remained stable, indicating that the rally was not just driven by traders adding new leverage.

"Bitcoin's breakthrough of US$70,000 reflects the combined effect of forced short covering, recovery in institutional demand and a more favorable liquidity background."

Meanwhile, net inflows of spot bitcoin ETFs exceeded US$600 million on Thursday, the highest level since May, and recorded inflows for the fourth consecutive day. Bitcoin ETFs have accumulated inflows of $1.61 billion so far this week, and this number is expected to climb further on Friday as institutional investors buy heavily. Sundgaard believes that once forced purchases decrease, spot trading and ETF inflows will determine whether Bitcoin can build support above $70,000 and move further higher. Bitcoin's price movement has pushed it past its 20-week and 200-day moving averages and the estimated short-term holder cost base, putting buyers in a profitable position.

Nick Rucker, director of research at LVRG, believes that the U.S. Treasury's announcement of doubling the size of bond repurchases has improved institutional investor sentiment and helped reverse the massive outflow of funds that has lasted for months. However, he warned that only progress on the Clarification Act, a clear path for interest rate policy and expanding access to crypto assets through retirement accounts can help build positive institutional trends. "Without additional confirmation, continued inflows of funds are unlikely to materialize. Until these catalysts are in place, capital inflows may remain temporary rather than structural."

Bitcoin momentum has been excessive

However, momentum has been excessive, with a one-hour RSI of about 78 and a four-hour RSI above 85. Positive funding rates also indicate that leveraged long positions are increasing. If bitcoin stays above $70,000, the rally could continue, while a drop near $69,000 could signal a retest rather than a trend reversal.

White House promotes crypto legislation

President Trump met with top crypto executives from companies such as Coinbase, Ripple, Gemini, Chainlink Labs, Kraken and others. After the meeting, Trump urged Congress to approve the Clarification Act, establishing clear market rules and dividing market regulatory responsibilities between the Securities and Exchange Commission and the Commodity Futures Trading Commission.

Bitget Wallet research analyst Rasi Chang believes the Trump administration must demonstrate lower borrowing costs, progress in high-growth industries, and strong financial markets before the November midterm elections. The SEC's Crypto Asset Regulation also provides a policy catalyst to provide exemptions for crypto companies and start-ups in certain circumstances. However, Zhang warned that if progress of the Clarification Act is blocked, conflicts of interest disputes and regulatory momentum weakens, investor sentiment may be dampened.