Bitcoin Tops $77,000 as $1.2 Billion Short Squeeze Fuels Rally

Bitcoin’s break above a six-week trading range triggered a short squeeze, as exchanges forcibly closed leveraged bearish positions and the resulting buybacks pushed prices higher. The move matters because it reset crowded derivatives positioning and tested whether the rebound could attract durable demand beyond forced covering. CoinGlass figures may understate the true scale because some exchanges limit liquidation reporting. The rally also unfolded as investors assessed Washington’s crypto-policy push and the outlook for U.S. liquidity and interest rates.

On Aug. 19, bitcoin touched $69,749 and was up 9.3% for the week. CoinGlass recorded $1.14 billion in crypto short liquidations within one hour, led by $677.64 million in bitcoin and $422.90 million in ether; total liquidations for the hour were $1.22 billion. Bitcoin later topped $71,000, while 24-hour short liquidations reached $2.74 billion. The same day, President Donald Trump urged Congress at a White House crypto event to pass the CLARITY Act, and the Federal Reserve released minutes of its July 28-29 meeting.

Bitcoin and Ether serve as key gauges of liquidity and risk appetite across digital-asset markets, where heavily leveraged derivatives can amplify abrupt price moves. When falling prices push traders below exchange margin requirements, forced sales may trigger further liquidations and deepen a decline. The scale of the latest unwind underscores the market’s vulnerability to cascading losses when leverage is elevated.

Bitcoin briefly dropped below $77,000 during the flash crash, while Ether fell through the $2,400 threshold. Roughly $500 million of bullish positions were liquidated within one hour, according to the report. Total crypto liquidations exceeded $1.8 billion over the 24 hours through publication, affecting more than 280,000 traders as automated margin closures swept through the market.

Bitcoin’s move above $80,000 reflected a rapid return of capital to the crypto market and triggered a short squeeze. When prices rise against bearish positions, exchanges forcibly close shorts with insufficient margin, adding further upward pressure. Market maker Wintermute warned, however, that spot trading volume had fallen to a two-year low and that the risk-reward profile at current prices was unattractive.

Bitcoin briefly touched $80,594 on Monday before climbing as high as $81,640, its highest level in about half a month. Market-wide liquidations exceeded $370 million over the previous 24 hours, with some estimates putting the total at $387 million and the number of affected traders at about 100,000. Shorts accounted for about 81%, with more than $300 million liquidated. One whale continued to hold a short position despite unrealized losses of about $13 million.

Bitcoin had previously suffered a brief, sharp flash crash that flushed out leveraged positions. Yet as geopolitical tensions mounted and U.S. stocks came under pressure, crypto assets rebounded first and began to decouple from other risk assets. The shift matters because investors may be reassessing Bitcoin's role as a safe haven and store of value, rather than viewing it solely as a volatile proxy for technology stocks.

As of July 20, Bitcoin had staged a sharp V-shaped rebound, briefly climbing above $80,777 to a recent high. Across the market, 119,000 traders were liquidated for a total of $498 million. Short positions accounted for about $339 million, or nearly 70%, producing a pronounced short squeeze. Signs of safe-haven capital moving into crypto drew attention as the market rallied despite falling U.S. stocks.

Bitcoin is the largest cryptocurrency by market capitalization, and $71,000 has recently served as a key technical and psychological threshold. A rapid price rally can force bearish traders to cover leveraged short positions, adding further upward pressure. However, Alternative.me’s Crypto Fear and Greed Index remains in “Extreme Fear,” indicating that investor confidence has yet to fully recover.

On July 19, Bitcoin broke above $71,000 and briefly topped $71,500, while Ether climbed above $2,200. CoinGlass data showed more than $170 million in market-wide liquidations within 12 hours, with short positions accounting for the majority. More recent figures showed about 87,000 traders liquidated for a total of $230 million, while the market has remained in a state of extreme fear for 46 consecutive days.