Highlights
- Bitcoin gained roughly 23% over the past week, its strongest weekly performance since the post-election rally of November 2024.
- A record $1.37 billion in bitcoin shorts were liquidated in a single day on August 19, eclipsing the prior high of $757 million set in July 2021.
- Spot and perpetual trading volume jumped 188% while CME bitcoin futures volume rose 152%, pushing the annualized futures basis to 11.1%, its highest since January 2025.
- K33 and Bitwise analysts point to Treasury Secretary Scott Bessent's bond-buyback push as a macro catalyst layered on top of the leverage flush.
- Bitcoin's correlation with gold has climbed to its highest level since October 2020.
Bitcoin has ripped roughly 23% higher over the past seven days, marking its best weekly showing since the rally that followed the November 2024 US election, and the move was powered by more than just spot buying. PANews reported that the rally coincided with the largest single-day short squeeze in the asset's history, with $1.37 billion in leveraged short positions forcibly closed on August 19 alone — well above the previous record of $757 million set during the summer of 2021.
The squeeze did not happen in a vacuum. Spot and perpetual trading volumes across crypto markets rose 188% as the liquidation cascade fed on itself, and activity on regulated venues moved in step: CME's bitcoin futures volume climbed 152%, and the annualized futures basis — the premium traders pay to hold long futures positions over spot — jumped to 11.1%, the richest level since January 2025.
A Leverage Reset, Not Just a Bounce
K33 Head of Research Vetle Lunde, writing in the firm's research note on the move, described the combination of forced deleveraging, shifting options positioning, and technical signals as resembling prior breakouts that marked the end of extended bear phases rather than a short-lived relief rally. That framing matters because bitcoin had spent months grinding sideways to lower before this week, leaving the market unusually crowded with short positioning that then had nowhere to go but to unwind violently once price turned.
Bessent's Bond Moves Add a Macro Catalyst
Bitwise CIO Matt Hougan pointed to a second, less obvious driver: US Treasury Secretary Scott Bessent's push to expand Treasury buybacks of long-dated government bonds, reportedly including discussion of tapping the nearly $1 trillion Treasury General Account to fund larger repurchases. Analysts read the move as a signal that Washington is willing to intervene directly in bond markets to manage financing costs — the kind of liquidity-friendly signal that has historically supported demand for scarce, hard-capped assets like bitcoin. Hougan noted that bitcoin's correlation with gold, which just posted its biggest weekly ETF inflow in ten months, has climbed to its highest level since October 2020, suggesting both assets are now being priced, at least in part, as hedges against the same debasement narrative.
Related: Bernstein Reaffirms $150K Bitcoin Target for 2027, $300K by 2029
What a Reset Would Mean
Whether this becomes a durable trend reset rather than a one-week spike now depends on whether spot demand can hold once the forced-liquidation flows dry up. A genuine reset would likely show up first in sustained ETF inflows and a futures basis that stays elevated rather than collapsing back toward zero, both of which are watchable in the days ahead. K33's framing — that the technical and flow picture now looks more like prior bear-to-bull transitions than a dead-cat bounce — gives traders a specific thesis to test against incoming data, rather than a vague call to buy the dip.
What to Watch Next
The next real test arrives with US PCE inflation data, which will shape whether the Federal Reserve leans toward holding or cutting rates at its next meeting — a decision that will either reinforce or undercut the liquidity narrative currently supporting bitcoin. Futures basis levels and ETF flow data over the coming week should show whether institutional demand is following the leverage unwind or whether the squeeze was simply clearing out an overcrowded trade.
