Bitcoin’s short squeeze sent the cryptocurrency toward $72,000, though uneven on-chain data and uncertainty around crypto legislation suggest the rally still lacks confirmation.
Bitcoin traded near $77,500 on Aug. 21, 2026, following an almost 8% jump the day before that briefly pushed it to about $78,000 and broke a months-long consolidation pattern. It was Bitcoin’s strongest single-day performance since March. Data from The Kobeissi Letter showed that crypto liquidations totaled $3.5 billion, including more than $3 billion in short positions.
The recovery was fueled by regulatory optimism, improving macro liquidity and the forced unwinding of leveraged short trades. As Bitcoin gained ground, short sellers were forced to buy back positions, adding to the upward momentum.
Bitcoin & Crypto Liquidations: Short Covering Drives the Surge
Crypto markets recorded $3.5 billion in liquidations over 24 hours, with short positions making up more than $3 billion of the total.
Bitcoin-related liquidations reached approximately $1.76 billion, while Ethereum accounted for around $1.16 billion. Ether jumped nearly 20% during the rally and traded above $2,200.
Crypto stocks also moved higher, with Strategy climbing almost 12% and Coinbase, Circle and BitMine posting gains of roughly 10%.
The report highlighted two major catalysts for the rally. The U.S. Treasury announced plans to increase the maximum size of individual liquidity-support repurchase operations involving 10- to 30-year Treasury securities from $2 billion to $4 billion between Sept. 9 and Nov. 4.
Standard Chartered’s Kendrick said the measure represents the type of government-driven liquidity support that has historically been favorable for Bitcoin.
Trump also met at the White House with senior regulators and executives from the crypto and fintech sectors. Those attending included SEC Chairman Paul Atkins, CFTC Chairman Michael Selig, along with representatives from Coinbase, Ripple and other crypto market infrastructure firms.
Trump said the government’s dispute with the crypto sector was over and floated the idea of accumulating Bitcoin and other digital assets. However, he did not provide specifics on the purchase strategy, financing or timing.
Bullish and Bearish Outlook
Analysts said a realized profit-and-loss ratio above 2, alongside a positive Coinbase Premium Index, could point toward a stronger and more lasting trend reversal. The $68,500 short-term holder cost basis remains a key support level for the market.
Political and legislative uncertainty could still weigh on the outlook. Polymarket data showed the odds of the CLARITY Act becoming law this year climbed from 20% to 28% after Trump’s remarks.
Senate Majority Leader Thune filed a cloture motion ahead of a Sept. 15 vote. The vote would determine whether lawmakers can proceed to formal debate and requires 60 votes, rather than serving as the final vote on the bill.
