Bitcoin leaps past $68,000 as shorts unwind

Bitcoin surged more than 6% on Wednesday, breaking above $68,000 as a sharp retreat in US Treasury yields revived demand for risk assets and forced heavily leveraged traders betting against cryptocurrencies to close their positions.

The world’s largest cryptocurrency traded around $68,500 after briefly climbing above $69,000, reaching its highest level in nearly three months. The move marked Bitcoin’s strongest percentage gain since March and extended a recovery from levels near $64,000 earlier in the day.

The rapid advance triggered more than $1 billion of cryptocurrency short liquidations within roughly an hour, while broader market estimates placed forced closures during the rally at about $1.4 billion. Short liquidations occur when exchanges automatically close leveraged bearish positions after prices move sufficiently against traders, requiring cryptocurrencies to be bought back and potentially accelerating an already rising market.

Ether climbed above $2,100 for the first time in months, while Solana and several other major digital assets advanced as buying spread across the cryptocurrency market. The performance marked a sharp change from earlier trading, when Bitcoin had hovered near $64,000 and moves among major tokens remained comparatively restrained.

The catalyst came from the US Treasury’s decision to double the maximum size of liquidity-support buybacks for longer-dated government securities from $2 billion to at least $4 billion per operation. The expanded purchases will apply to securities in the 10-to-20-year and 20-to-30-year maturity sectors between September 9 and November 4.

Treasury buybacks involve the government repurchasing older securities before maturity, helping improve liquidity in parts of the bond market where trading can become less efficient. Although the additional purchases are small compared with the overall Treasury market, investors interpreted the decision as evidence that policymakers were prepared to respond to disorderly moves in longer-term borrowing costs.

The announcement reversed part of a severe bond sell-off. The 30-year Treasury yield, which had reached 5.34% on Tuesday — its highest level since 2007 — fell towards 5.19%. The benchmark 10-year yield declined to about 4.65%. Lower yields reduce the relative attraction of government debt and can encourage investors to move capital towards equities, cryptocurrencies and other higher-risk assets.

The reaction extended well beyond digital tokens. The dollar weakened, while bonds, equities and gold strengthened as financial conditions eased. Bitcoin, which often responds strongly to shifts in global liquidity and real interest-rate expectations, became one of the biggest beneficiaries of the rapid repositioning.

Crypto-linked shares amplified the move. Coinbase Global jumped about 13%, while Strategy, the Bitcoin accumulation company founded by Michael Saylor, gained roughly 14%. Stablecoin issuer Circle Internet Group advanced around 12%, and American Bitcoin, the mining and digital-asset treasury company co-founded by Eric Trump, rose about 17%.

The rally also came as cryptocurrency executives prepared for a White House meeting with President Donald Trump, adding a political and regulatory dimension to the market’s renewed optimism. Washington’s approach towards digital assets has become an increasingly important influence on cryptocurrency valuations, particularly as regulators consider rules covering exchanges, token markets and other digital-asset businesses.

Despite Wednesday’s rally, the Treasury intervention does not remove the pressures that caused long-term yields to rise. Government debt is approaching $40 trillion, while inflation risks, heavy borrowing requirements and geopolitical tensions continue to influence investor demand for long-dated securities. Treasury officials have described the expanded buybacks primarily as a measure to support market liquidity rather than a programme intended to alter monetary conditions.

The programme could raise maximum Treasury repurchases across maturities during the August-to-November quarter from the previously planned $69 billion to as much as $83 billion. Three further operations involving 20-to-30-year securities and four covering the 10-to-20-year sector are scheduled during the period.

Arabian Post – Crypto News Network