Bitcoin Bears Get Short-Squeezed by Rebounding Crypto Optimism 

About $700 million in bitcoin short positions were liquidated this week in less time than it takes to heat up a $20 burrito (about one minute). Bitcoin climbed above $72,000 Thursday, a day after the Treasury moved to double long-duration bond buybacks and, separately, President Trump put pressure on lawmakers to pass crypto’s long-awaited Clarity Act. 

Bitcoin breaking out of the $62,000-to-$66,000 cage it’s been in for the past six weeks caused bearish bets to backfire. Over the 24 hours through Thursday morning, CoinGlass found about $1.8 billion in bitcoin shorts were liquidated as bitcoin’s second-biggest short squeeze ever took hold. 

At the same time, spot bitcoin ETFs on Wednesday notched their biggest daily inflow ($517 million) since early May, per SoSoValue. Now, investors will be watching to see if bitcoin’s bounceback has staying power. 

‘QE Lite’ Does Not Equal QE

The US Treasury’s move to double its long-term bond buybacks from $2 billion to $4 billion has been dubbed “QE Lite” on social media, meaning “Quantitative Easing Lite.” It’s not actually quantitative easing, to be clear. But it may have a similar impact by weakening the US dollar and sending investors scurrying to assets perceived as debasement hedges, 21Shares said. Bitcoin is sometimes interpreted as a hedge against a weakening dollar because of its fixed supply that can’t be tweaked by an outside force like a central bank. 

Traders were already starting to move money back into bitcoin when the second wave in the set rolled in:

• President Trump assembled the crypto Avengers — Coinbase founder Brian Armstrong, Kraken Co-CEO Arjun Sethi, and the Winklevoss twins among them  — in the White House’s Roosevelt Room to talk digital shop. In the meeting, Trump put pressure on Congress to pass the Clarity Act, a wide-reaching bill for regulating crypto whose deadline has been delayed twice. It’s currently set for September 15. 
• CFTC Chair Michael Selig said Thursday the agency plans to “move swiftly” to set rules around crypto if the Clarity Act fails to pass and will immediately roll out the bill’s rules if it does. 

Warming Up: Bitcoin’s been looking bearish for a while, and it’ll need to sustain its upswing for a while longer to ignite hope of melting its current crypto winter. Its short-term versus long-term moving averages after this week’s rally still form a death cross, and the coin is still far off its October peak above $126,000.