Bitcoin Jumps $10K in a Week as Short Sellers Lose $3 Billion

August 22, 2026 — Bitcoin surged past $77,000 this week after the U.S. Treasury doubled its bond buyback program, triggering the largest short squeeze since 2021. The cryptocurrency touched $79,500 yesterday, wiping out approximately $3 billion in short positions within a single 24-hour window.

Immediate Details & Direct Quotes

The rally began after the U.S. Department of the Treasury announced it would raise the maximum size of its liquidity-support buyback operations from $2 billion to $4 billion per operation. The new ceiling takes effect September 9 and covers 10-to-30-year Treasury bonds through the current refunding quarter, which concludes November 4.

The Treasury’s decision pulled the 10-year yield down roughly six basis points to approximately 4.647%, while the 30-year yield slid nine basis points to 5.196%. This retreat followed the 30-year’s climb to 5.33% earlier this month, its highest level since 2007.

Bernstein strategist Gautam Chhugani directly linked the move to the Treasury announcement, stating: “The strong trigger in bitcoin was driven by Treasury’s move to buyback bonds at the longer end of the yield curve.”

Automated liquidation engines force-closed 172,108 short positions during the week, marking the worst short-side wipeout since 2021 and surpassing the October 2025 record of $2.47 billion.

Market Context & Reaction

Bitcoin had spent six weeks pinned between $60,000 and $65,000 before this week’s breakout. The rally accelerated once the price broke above resistance near $70,000, a level it had not closed above since May.

Bitcoin gained 11% in the 24-hour window when short positions were liquidated, as forced buying compounded the Treasury-driven momentum. Traders are now watching whether Bitcoin can clear $80,000, a level not seen since May 2026.

The price move coincided with a White House meeting between President Donald Trump and crypto industry leaders, including executives from Coinbase and Robinhood. No policy outcome was announced, but the optics reinforced Washington’s increasingly accommodative stance toward the industry.

Equity markets moved in tandem with the Treasury announcement. The S&P 500 added 28.12 points to close at 7,719.88, while the Dow Jones Industrial Average rose 145.50 points to 53,488.90. The Nasdaq Composite slipped 38.22 points to 26,251.49.

Background & Historical Context

The Treasury’s expanded buyback program effectively allows the government to repurchase older, less liquid bonds before maturity, easing borrowing costs and injecting cash into the market. Markets interpreted this as a liquidity signal, prompting traders to rotate into Bitcoin as a hedge against renewed monetary easing.

During the same window, President Trump publicly urged Congress to pass the CLARITY Act, a bill that would establish clearer federal rules for digital asset markets. This regulatory development has become one of the most closely watched storylines for crypto investors this year, adding a policy tailwind on top of the liquidity narrative.

The combination of Treasury action, political momentum, and forced short covering created a confluence of factors that propelled Bitcoin’s sharpest weekly gain in months. Momentum indicators have started to firm after weeks of consolidation, suggesting the rally may have additional room to run as the market approaches the $80,000 threshold.

What This Means

The immediate focus centers on whether Bitcoin can reclaim and hold the $80,000 level, which would mark its first return to that price point since May. A successful breakout could trigger another wave of buying activity.

The Treasury’s expanded buyback program runs through November 4, potentially providing sustained liquidity support for risk assets in the coming months. Traders should monitor upcoming Treasury operations for signals about the pace and scale of future buybacks.

The CLARITY Act’s progress through Congress remains a key regulatory catalyst. Any legislative developments could significantly impact market sentiment and institutional participation in digital assets.

The combination of liquidity expansion, regulatory momentum, and institutional engagement suggests a potentially extended period of support for Bitcoin and the broader crypto market, though traders should remain mindful of volatility risks inherent in the sector. As always, conduct your own research before making investment decisions.

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