Bitcoin Hits $71,992 As Historic Short Squeeze Shakes Crypto

The crypto market has just reminded how explosive bearish bets can become. In just 48 hours, a massive wave of short position liquidations hit derivatives, while bitcoin approached a major psychological threshold. Behind this acceleration is a decisive macroeconomic factor: the surprise inflow of liquidity in the United States. Between short squeeze, American budget intervention and on-chain investor repositioning, this scenario reveals the forces that could now dictate bitcoin’s trajectory.

The largest short position liquidation ever recorded in the crypto market

The derivatives market has just experienced two days of forced capitulation of unparalleled intensity for short sellers. According to aggregated data from the analysis platform CoinGlass, short position liquidations across the entire crypto market exceeded the 3.1 billion dollar mark between August 19 and 20. Thursday now stands as “the largest daily short position liquidation ever recorded” in the history of these assets.

In this instability, the BTC/USD pair played its role as the main driver by capturing on its own more than half of the losses suffered by bearish investors, representing a total amount of 1.65 billion dollars in short position liquidations. Under constant pressure from forced buybacks, the bitcoin price rose to reach a local peak at 71,992 dollars, marking its highest level recorded since early June.

To fully grasp this movement without distorting the reality of the figures, it is necessary to observe this sequence in its global context. Including all positions, both buying and selling, the data provided by CoinMarketCap set the total liquidations for Thursday at 3.25 billion dollars, ranking this day seventh historically among the largest liquidation events by absolute dollar value.

This volume remains admittedly below the shock absorbed by buyers during the 20 billion dollar liquidation wave following bitcoin’s all-time high at 126,200 dollars in October 2025. This recent sequence stands out, however, by its almost exclusively bullish dynamic, which trapped thousands of traders convinced that the resistance zone would hold.

Several key numerical metrics summarize the unprecedented scale of this situation :

• 3.1 billion dollars : total amount of short position liquidations recorded in 48 hours ;
• 1.65 billion dollars: portion of short liquidations directly attributable to bitcoin ;
• 71,992 dollars : the local peak reached by BTC, the highest since June ;
• 3.25 billion dollars : the cumulative total of all liquidations on Thursday.

A bullish impulse fueled by the US Treasury liquidity injection

At the origin of this devastating buying impulse for short sellers lies a macroeconomic decision directly from Washington. The market immediately reacted to a liquidity intervention by the US Treasury, which decided to double the amount of its debt repurchase operations. This sudden cash injection into the bond system instantly reflected on risk assets.

Bitcoin’s rapid rebound on Wednesday, marking its highest level in 11 weeks, triggered an unrelenting squeeze mechanism: crossing sellers’ invalidation levels caused emergency buybacks, mechanically propelling the bullish momentum.

The contagion effect caused by the easing of financial conditions caught a significant part of the institutional market positioned bearish off guard. Furthermore, successive breaches of key technical levels transformed sellers’ stop-loss orders into market buy orders, accelerating the rise of the leading crypto. This upward suction phenomenon once again demonstrates the close correlation between central bank or Treasury liquidity and risk appetite on crypto trading platforms.

Massive profit-taking among short-term holders

Alongside this futures market turmoil, on-chain data reveals a pragmatic reaction from investors. Taking advantage of this liquidity return and rebound they hadn’t seen since summer, short-term holders, i.e., wallets holding their UTXOs for less than 155 days, massively unloaded their positions.

According to platform CryptoQuant, they transferred a record volume of 44,300 BTC in profit to exchange platforms, marking their largest profit-taking since the beginning of the year. This positive capitulation is confirmed by the SOPR (Spent Output Profit Ratio) indicator applied to short-term holders. Today, this ratio climbed to 1.01, reaching its highest level since April and attesting that most moved coins finally traded above their average acquisition price.

This behavior reflects a strong desire among recent buyers to secure capital after several months of stagnation or non-existent latent capital gains. The return above the average purchase price for this investor profile often acts as a major psychological resistance test. Thus, the simultaneous inflow of more than 44,000 coins into centralized order books now imposes a significant supply cushion that spot buyers will have to fully absorb if the trend wants to maintain momentum.

The interaction between this massive short position flushing and the simultaneous arrival of this significant BTC volume on centralized platforms paints a complex landscape for the coming weeks. On one hand, the forced disappearance of a colossal volume of sell positions cleans the order book and reduces the risk of immediate bearish pressure due to leverage. On the other hand, the market’s ability to absorb the token flow put back into circulation by relieved investors exiting at cost or slight gain will determine if the 72,000 dollar threshold was just a fleeting peak fueled by liquidations or the solid foundation of a sustainable bullish trend recovery.