A record Bitcoin short squeeze liquidated crypto short positions worth USD 3.3 billion within 24 hours, the highest reading since Coinglass began keeping records in 2021. Bitcoin jumped 8% and broke through the USD 70,000 mark.

A short position is a bet on falling prices: a trader sells borrowed coins expecting to buy them back more cheaply. If the price rises instead, the trader has to cover the position at a loss, and that buying pushes the price up further — a mechanism traders call short covering.

The squeeze struck a market that had been shaped by mostly bearish positioning for months. Money flowed out in May and June, and demand stayed uneven until mid-August, with Bitcoin briefly falling into the low 60,000s. Overall, the liquidation wave hit 172,108 traders.

More one-sided than the 2025 crash

According to Coinglass, the USD 3.3 billion figure is the highest daily total since records began in 2021. Long positions, by comparison, reached only USD 270 million in the same window. Shorts therefore accounted for around 92% of all liquidations, a ratio of more than 10:1.

The speed stands out most. Exchanges closed out more than USD 1 billion in short positions within roughly an hour. Such cascades emerge when liquidations trigger further liquidations: every forced closure is also a purchase, lifting the price into the next cluster of leveraged positions.

The crypto crash of 10 October 2025 puts the event into perspective. Total liquidations then added up to around USD 19 billion, more than five times the recent event, yet short liquidations came to just USD 2.47 billion. The current squeeze was therefore far more one-sided, even though its overall volume was smaller.

Records of this kind still come with caveats. Binance has sharply limited its liquidation reports since April 2021, and Coinglass, by its own account, captures only one report per second per exchange. Historical and current totals therefore probably understate the real volume, which matters when comparing one episode with another across different market regimes.

Bitcoin climbs 8% to above USD 70,000

On Wednesday morning, Bitcoin opened at around USD 64,681 and slipped to a daily low near USD 64,100. Within a few hours, the price turned and broke through USD 70,000.

Ether gained even more sharply, rising roughly 18%. The second-largest cryptocurrency topped the USD 2,000 mark for the first time in weeks, having opened at about USD 1,916; its range now extends to USD 2,275.

The move did not stop at the derivatives market. US spot Bitcoin ETFs recorded net inflows of USD 517.19 million on the same day — the highest daily figure since 4 May 2026 and the strongest reading in three and a half months. Such funds track Bitcoin directly and serve as an access route for regulated investors who prefer not to hold coins themselves. The spot market thus confirmed the move in derivatives.

Altogether, eight of the twelve funds reported inflows. BlackRock's IBIT led with USD 284.7 million, followed by ARKB from Ark & 21Shares with USD 77.7 million and Fidelity's FBTC with USD 62.4 million.

Treasury buybacks push yields lower

A macroeconomic trigger landed the same morning. The US Treasury doubled the cap per buyback operation for longer-dated nominal coupon bonds, raising the ceiling from USD 2 billion to at least USD 4 billion. The rule specifically covers the 10-to-20-year and 20-to-30-year maturity segments, and the window runs from 9 September to 4 November 2026. In addition, the number of operations at the long end rises from two to four per quarter — a pace at which the Treasury could buy back around USD 128 billion per year in the affected maturities.

The timing was notable. Only a day earlier, the yield on 30-year US Treasuries had hit a 19-year high of 5.33%. After the announcement, it eased by about 9 basis points to 5.196%. The ten-year yield also fell, by roughly 6 basis points, to 4.647%. Worries about the US fiscal position drive those yields, alongside geopolitical risks such as the Iran conflict.

The measure does not target crypto, however, but the functioning of the bond market. Lower yields and a softer dollar generally support risk appetite, which can matter for Bitcoin and other speculative assets when positioning is already stretched.

SEC proposes exemptions from securities registration

The SEC had published its "Regulation Crypto Assets" proposal a day before the squeeze. The paper sets out two new exemptions from the registration requirement for securities. A first variant covers issuances of up to USD 5 million over a four-year period; the second allows up to USD 75 million per twelve-month period. The larger exemption would require financial statements and ongoing reporting duties. The agency cites easier capital raising for companies in the start-up and financing phase as the purpose. The public comment period runs for 60 days from publication in the Federal Register.

A day later, US President Donald Trump received industry representatives at the Eisenhower Executive Office Building. Attendees included Coinbase CEO Brian Armstrong, Kraken co-CEO Arjun Sethi, and representatives of Gemini and Robinhood. SEC Chair Paul Atkins and CFTC Chair Michael Selig also sat at the table. Trump pressed Congress to pass the market structure bill known as the Clarity Act, and the president added that Selig is working to bring Hyperliquid into the US, allowing the perpetual futures exchange to enter the country legally and fully compliant. Hyperliquid's HYPE token subsequently rose 23.23%.

The SEC proposal fits into a series of regulatory moves in 2026. With the Clarity Act stalled in Congress, the executive branch and regulators are trying to create clarity through rulemaking. The proposal is not yet in force; nevertheless, the market read it as a directional signal. For investors that Wednesday, direction mattered more than the legal detail. Fiscal and regulatory signals thus met one-sided positioning, helping explain why the squeeze found such crowded short exposure to unwind.