BTC rally wipes out $3B in shorts

TLDR

Bitcoin's latest rally triggered a huge short squeeze, with around $3 billion in bearish positions liquidated within 24 hours and leverage resetting across crypto derivatives.

1. Bitcoin jumped from the low 60,000s toward 80,000, wiping out roughly $3 billion in short futures and funding a forced-buying squeeze that was the largest since 2021.
2. The move was fueled by US Treasury plans to double long-bond buybacks, strong spot ETF inflows, and crowded short positioning that left bears vulnerable once key resistance broke.
3. Leverage has come down but is still significant, and BTC is technically overbought, so traders are watching support around the mid 70,000s and renewed liquidation clusters in both directions.

Deep Dive

1. Scale Of The Short Squeeze

Reports show Bitcoin (BTC) rallied about 20 percent in under a week, from the low 60,000s to highs near 79,500, while traders betting against it lost about $3 billion in a single day, the largest short-side wipeout since 2021, according to derivatives data cited by Bitcoin.com.

One analysis notes roughly 172,000 traders were liquidated across exchanges during the main window, with short liquidations estimated between $3 billion and $4 billion over several sessions in a cascading squeeze that forced bears to buy back BTC into rising prices.

Market-wide perpetuals open interest fell about 12 percent over 24 hours while still sitting near $450 billion, indicating that a lot of leveraged exposure was cleared but the derivatives complex remains large.

2. Macro And ETF Drivers

Analysts widely link the rally to the US Treasury decision to double long-dated bond buybacks from $2 billion to $4 billion per operation, which lowered long yields and signaled easier liquidity, prompting rotation into scarce assets like Bitcoin, as detailed in the Treasury-linked rally coverage.

Additional fuel came from US spot Bitcoin ETFs, which saw nearly $2 billion of net inflows over several sessions, with single-day flows above $600 million into leading funds, reinforcing demand that must be met by underlying BTC purchases, as highlighted in Standard Chartereds short-squeeze analysis.

Crowded shorts built during weeks of range-bound trading around 60,000 to 65,000 then faced a regime change once BTC pushed through 70,000, triggering liquidation engines that turned bearish positioning into aggressive buy pressure on the way up.

3. Overbought Setup And What To Watch

Technically, BTCs daily RSI has moved above 80, a zone that historically precedes cooling phases or corrections after fast rallies, and key support now sits in the mid 70,000s and near the 200 day moving average around 69,000, as noted in recent overbought-risk commentary.

At the same time, average perpetual funding has flipped firmly positive and BTC dominance is near 59 percent, pointing to bullish sentiment but also increased cost for leveraged longs if the market stalls.

Confidence: high given multiple independent derivatives and ETF flow datasets supporting the numbers.

Conclusion

Bitcoins rally did not just rise on organic spot buying. A macro easing signal from US bond buybacks, strong ETF inflows, and heavily crowded shorts combined to produce a record short squeeze that vaporized about $3 billion in bearish bets.

With leverage reduced but still substantial and BTC in overbought territory, the key question now is whether the market can consolidate above new support zones or whether another round of liquidations, this time on the long side, drives a pullback toward the prior trading range.