Key highlights:

  • Over $1.6 billion worth of leveraged short cryptocurrency positions have been liquidated in the last 4 hours as the Bitcoin price showed a sudden spike
  • Bitcoin peaked at $69,600, hitting its highest prices since June
  • Although a short squeeze likely played a key role in today's crypto market rally, the U.S. Treasury's increased bond buybacks and today's White House meeting with top crypto execs are likely also boosting crypto sentiment

Bitcoin hit its highest prices since June in a sudden upwards move today, briefly reaching as high as $69,600 before stabilizing at around $68,500. Before the sudden rally, BTC was changing hands at roughly $64,500.

Other crypto assets responded as well, most notably Ethereum and Zcash. ETH broke through $2,000 to hit $2,100, and is currently posting a very impressive 8.9% 24-hour change. Meanwhile, Zcash gained 8% and surpassed the $550 level for the first time since July 20. 

 

Over $1.8 billion in leveraged positions were liquidated, 93% of them short

As is often the case in the crypto market, there is not a clear single catalyst that could adequately explain a move of this magnitude. Most likely, a short squeeze was a significant contributor, as data from CoinGlass shows $1.8 billion worth of leveraged positions have been liquidated in the last 4 hours alone, with the overwhelming majority of liquidations (93%) affecting short positions.

Crypto liquidations heatmap

 

Crypto liquidations overview. Source: CoinGlass 

A short squeeze occurs when an asset’s price makes a sudden move upwards while there is an excessive amount of short positions open on the asset. The price increase forces the most exposed short sellers to buy the asset to prevent further losses, which in turn increases the asset’s price and forces other short sellers to do the same. This chain reaction can lead to dramatic price increases in a very short period of time. 

Data from CoinGlass also shows a notable spike in open interest, as leveraged traders are looking to turn a profit from the sudden spike in volatility. In the last 4 hours, Bitcoin open interest on Binance surged by 10.2%, while it saw a 5% bump on the CME. 

Increased U.S. treasury buybacks and Trump’s meeting with crypto execs could be providing the fundamental background to the sudden rally

The U.S. Treasury announced it will at least double buyback sizes for 10- to 30-year Treasury securities from $2 billion to $4 billion per operation between September 9 and November 4. The move targets stressed longer-duration debt markets after the 30-year Treasury yield reached 5.34%, its highest level since 2007, amid fiscal concerns, geopolitical uncertainty and weak demand for long-dated bonds.

The announcement immediately eased market stress: long-term Treasury yields fell sharply, with the 30-year yield dropping toward 5.20%, while equity futures moved higher. 

The increased buybacks can be positive for risk assets if they sustainably reduce long-term yields and lower volatility in the Treasury market. Improved Treasury market liquidity can additionally reduce fears of broader financial-market dislocations and encourage investors to take more risk. 

Another positive catalyst for the crypto market could be today’s White House meeting between U.S. president Donald Trump and key crypto industry and prediction market executives. The meeting is a prelude to the first formal meeting of the CFTC’s newly established Innovation Advisory Committee. The meeting is scheduled for 2:30 PM ET. 

Crypto is not the only asset class that’s rallying today

Although cryptocurrencies have seen the most pronounced gains today, the gold price has also displayed a sharp rally, gaining 2.8% in the last 24 hours and reaching its highest price levels since early June. Silver saw an almost identical increase, as the silver price surged by 2.9% today.

The S&P 500 is up by a modest 0.3% today, while the tech-heavy Nasdaq 100 index has seen a 0.04% decline. 

BTC vs gold vs sp500