Bitcoin staged a dramatic comeback on Wednesday, surging more than 8% to reach $69,970.36 鈥?its highest level since early June and the largest single-day gain since March. The sudden reversal forced a wave of short sellers to cover their positions, creating the biggest Bitcoin short liquidation event since record-keeping began in 2021.
According to Coinglass data, over $1 billion in Bitcoin short positions were forcibly liquidated within roughly one hour. The move came after months of sustained declines that had pushed Bitcoin to just above $60,000, steadily building bearish sentiment across the market. As prices reversed sharply upward, short covering generated significant passive buying pressure that further fueled the rally, creating a textbook short squeeze scenario.
Multiple tailwinds emerged behind this rebound. President Trump met with executives from several cryptocurrency companies at the White House that day, including representatives from Coinbase (COIN.US), Payward, and Blockchain.com Group Holdings, reinforcing market expectations of a more digital-asset-friendly regulatory environment under the current administration. Meanwhile, the SEC this week proposed a new framework that would allow certain digital asset issuances to bypass securities registration requirements, with exemptions aimed primarily at early-stage and fundraising companies to lower their capital-raising barriers.
This regulatory progress comes after congressional efforts on cryptocurrency market structure legislation had stalled. IG Chief Technical Analyst Axel Rudolph noted that Bitcoin's push toward $70,000 was mainly driven by short covering, indicating recovering buyer confidence. However, the current rally faces a critical test: whether it can sustain momentum and challenge the $75,000 region. Joshua Lim, Co-Head of Markets at FalconX, observed that cryptocurrency trading had been dominated by sell-side pressure and negative headlines for weeks, yet Bitcoin held up remarkably well in the low $60,000 range, ultimately shifting market sentiment and trading dynamics.
Technical indicators also showed significant improvement. Wednesday's surge pushed Bitcoin back above its 100-day and 200-day moving averages, both closely watched technical benchmarks for traders. The rebound spread across the broader crypto market, with Ethereum climbing 12% intraday, also marking its best single-day gain since March. Options market positioning had reflected investor bets on key price levels. Deribit data showed Bitcoin options traders had heavily allocated downside protection around $60,000 while building upside positions near $70,000, with open interest concentrated at these two strike prices.
Beyond regulatory catalysts, the U.S. Treasury's surprise expansion of its long-dated bond buyback program served as another major boost for Bitcoin. Treasury Secretary Bessent moved to ease upward pressure on long-term funding costs, announcing the department would at least double its liquidity support buybacks for 10- to 30-year Treasuries. Following the announcement, long-term Treasury yields and the dollar both declined, creating a more favorable backdrop for risk assets like Bitcoin. Adam McCarthy, Research Head at liquidity and market data firm LO:TECH, noted that shorting Bitcoin had become one of the most crowded trades in recent weeks, and the Treasury's policy signal that day significantly boosted investor confidence, triggering rapid capital rotation back into Bitcoin and other risk assets.
The Bitcoin surge also lifted cryptocurrency-related stocks broadly. Coinbase (COIN.US), one of the largest U.S. digital asset exchanges, rose over 9%, while Bitcoin treasury holder Strategy (MSTR.US) gained more than 12% and stablecoin issuer Circle (CRCL.US) climbed nearly 10%. However, uncertainty remains regarding U.S. crypto regulation. The Clear Act, designed to establish a market structure framework for digital assets, remains stalled in the Senate, with Democrats and Republicans divided over ethics provisions, some of which relate to Trump's own involvement in the digital asset industry.
The key question for Bitcoin now is whether this short-covering-driven surge can transform into genuine sustained buying. The squeeze demonstrates how concentrated bearish positioning had become, and once prices reversed, forced liquidations created a self-reinforcing rally. With Bitcoin approaching the $70,000 threshold again, market focus will shift to whether buying momentum can persist and challenge the critical $75,000 zone ahead.