Bitcoin Breaks Above $72,000 as Treasury Stimulus and Massive Short Squeeze Converge

Bitcoin has surged to its highest level since early June, breaking decisively through $72,000 Thursday following a powerful two-day rally that has triggered unprecedented losses among bearish traders. The cryptocurrency reached an intraday peak of $72,408 before settling near $71,423, a 3.07% daily gain that caps a surge of nearly 15% since Monday. This level represents the strongest recovery from a June 2 flash crash that had momentarily sent Bitcoin plummeting from around $71,765 to $67,895 in a single session. That move opened the door to a months-long decline, dragging Bitcoin to a 21-month low near $57,832 by the end of June and establishing the bearish technical backdrop that held until this week’s breakthrough.

The Record-Breaking Short Squeeze

The rally’s intensity has come at an extraordinary cost for traders positioned for further declines. A massive liquidation of short positions—bets that Bitcoin’s price would fall—unfolded across markets in a single 24-hour period, with losses exceeding $3 billion and over 190,000 traders forced from their positions. Data from Coinglass showed 174,416 traders liquidated with total losses reaching $2.85 billion.

The mechanics of these liquidations amplify market moves: when traders borrow and sell Bitcoin betting on lower prices, rising markets eventually force exchanges to close those positions once collateral can no longer cover the losses. These forced buybacks push prices higher, triggering the next wave of liquidations in a self-reinforcing feedback loop known as a short squeeze. Wednesday’s initial break above $70,000 set this process in motion, while Thursday’s decisive move through $72,000 has intensified the unwinding across leveraged positions.

Treasury Stimulus and the “QE Lite” Backdrop

The price surge coincides with significant stimulus signals from Washington. According to the U.S. Treasury, the government will double its program of long-bond buybacks—purchases of its own debt intended to bolster demand and ease borrowing costs. The operational cap increased from $2 billion to $4 billion per transaction on 10-to-30-year securities, with the changes taking effect September 9.

The Treasury’s move pulled bond yields lower and weakened the U.S. dollar, a combination that market analysts have termed “QE Lite” for its resemblance to Federal Reserve quantitative easing programs. Such conditions historically loosen financial liquidity and support risk assets, including cryptocurrencies.

The policy announcement arrived hours before a high-profile White House meeting where President Trump convened with executives from major crypto companies including Coinbase, Ripple, and Robinhood. The convergence of policy support and elevated political engagement with the crypto sector produced a swift sentiment reversal: traders using the Myriad prediction market had leaned heavily bearish, assigning 70% probability to Bitcoin reaching $55,000 just a day earlier. By Wednesday afternoon, that conviction had dissolved to nearly even odds at 50-50.

Momentum Building

Bitcoin’s move through $72,000 marks the most significant test yet of the bearish technical patterns that defined mid-to-late summer. With policy support and short-squeeze dynamics providing tailwinds, the broader crypto market may find renewed momentum heading into the fall.

Source: U.S. Treasury, via Decrypt. Not financial advice.