Crypto surge triggers record $3.4 billion of short liquidations

The crypto market suddenly sprang back to life, sending Bitcoin up nearly 8 per cent and unleashing the biggest wave of short liquidations in records going back to 2021.

More than US$1 billion (S$1.27 billion) of Bitcoin short positions were liquidated in about an hour, according to data from CoinGlass, underscoring the speed of the Aug 19 reversal that pushed the largest cryptocurrency to around US$69,500.

That is the highest since early June and its biggest gain since March. Across crypto tokens, a record US$2.7 billion (S$3.43 billion) in bearish bets were wiped out.

Bitcoin held its gains in Asia on Aug 20, trading around US$69,450 at 1pm in Singapore. 

The upswing came as US President Donald Trump met crypto executives from firms including Coinbase Global, Payward and Blockchain.com Group Holdings at the White House, adding to optimism around an administration that has sought to promote a more industry-friendly regulatory framework for digital assets. Falling borrowing costs added another tailwind.

“The move towards US$70,000, triggered by short-covering, suggests buyers are regaining confidence, although the rally now faces a crucial test of whether it can sustain momentum and challenge the US$75,000 region,” said Axel Rudolph, chief technical analyst at investing and trading platform IG.

The size of the move is also a sign of how one-sided the market has become.

After months of selling and a descent into the low US$60,000s, bearish positioning had piled up in an asset with a long history of overshooting in both directions.

Once prices turned higher, forced buying from short-sellers helped accelerate the rebound, producing the kind of abrupt snapback that frequently follows prolonged, one-way moves in crypto.

The White House meeting took place after the US Securities and Exchange Commission proposed this week to exempt certain digital-asset offerings from securities registration statements as the regulator moves ahead with its crypto agenda after landmark legislation stalled in Congress.

The agency said the exemptions are intended to help companies at the start-up and fund-raising stages of their growth.

Trump also said on Aug 19 that he would consider regulators’ recommendations on additional government Bitcoin acquisitions, though an existing executive order already directs the Treasury and Commerce departments to develop budget-neutral strategies for acquiring more.

“Crypto trading desks and market headlines have been inundated by sellers in the last few weeks,” said Joshua Lim, co-head of markets at FalconX. “Despite that, price action held very firm in the low US$60,000s, which turned into a sentiment and narrative shift.”

The rally spread across digital tokens and lifted Bitcoin above its 100- and 200-day moving averages, technical gauges closely watched by traders. Ether jumped 16 per cent, the biggest one-day gain since May 2025. It climbed a further 1.5 per cent in Asia to US$2,250 on Aug 20.  

In the Bitcoin options market, traders had built protection around US$60,000 while positioning for a rise towards US$70,000, with open interest concentrated in puts and calls around those respective strike prices, according to crypto exchange Deribit.

Bitcoin spot US exchange-traded funds recorded US$517 million in net inflows on Aug 19, the most since May.

Treasury boost 

US Treasury Secretary Scott Bessent made a fresh attempt to rein in long-term borrowing costs from multi-year highs, sending Treasury yields and the dollar lower and improving the backdrop for higher-risk assets.

Just two weeks after releasing its planned schedule for buybacks this quarter, the Treasury Department on Aug 19 said it is “increasing, by at least double, the size of liquidity support buyback operations” for securities dated from the 10-year to the 30-year sector.

“Bitcoin short was a conviction trade over the last few weeks, but the news today from the Treasury in the US has obviously triggered a confidence-induced rush into risk assets like BTC,” said Adam McCarthy, head of research at crypto liquidity and market data firm LO:TECH. 

Shares of crypto-focused companies also rallied. Coinbase – the US digital trading platform – jumped 10 per cent, Bitcoin accumulator Strategy increased 13 per cent and stablecoin issuer Circle Internet Group surged almost 10 per cent.

The crypto market structure legislation, known as the Clarity Act, has stalled in the US Senate amid a fight between Democrats and Republicans over ethics provisions spurred, in part, by Trump’s own involvement in the digital-asset sector.

For Bitcoin, the immediate test is whether the Aug 19 forced buying gives way to genuine demand. The short squeeze showed how stretched the downturn had become. It also showed that after months in which nearly every sharp move seemed to point lower, crypto’s capacity for sudden, self-reinforcing reversals remains intact. BLOOMBERG