Bitcoin Holds Above $77,000 After Treasury Buyback News Sparks Massive Short Squeeze

Bitcoin is consolidating above the $77,000 level after a sharp rally pushed it as high as $79,200 on Friday. The move was triggered by a U.S. Treasury announcement that eased pressure on government bond yields and sparked a massive short squeeze, liquidating billions in bearish crypto positions.

Treasury Action Fuels Rally

The rally accelerated after the U.S. Treasury said it would double its buybacks of longer-dated government bonds to $4 billion per operation, up from $2 billion. The announcement helped push the 30-year Treasury yield down from a 19-year high of 5.34% to approximately 5.19%, according to market data.

Lower government bond yields reduce the opportunity cost of holding non-yielding assets like Bitcoin, increasing their relative appeal to investors. Analysts noted that the Treasury's buyback program is designed to improve market liquidity and is distinct from quantitative easing, which involves central bank asset purchases.

A $4 Billion Short Squeeze

The sudden drop in yields and subsequent price surge triggered a rapid unwinding of bearish bets on the cryptocurrency. Key market events included:

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• Approximately $4 billion worth of short positions were liquidated on Thursday and Friday.
• Bitcoin's price broke through key technical levels, including its 200-day moving average near $69,000.
• Trading activity surged, with Binance reportedly recording $1.26 billion in Bitcoin futures volume in a single 60-second period, according to data cited by CoinDesk.

The rally was also supported by improving spot demand, with U.S. Bitcoin exchange-traded funds (ETFs) seeing net inflows of around $650 million.

Market Outlook and Key Levels

Analysts remain divided on whether this rally marks a definitive end to the recent market downturn. Some observers view the powerful short squeeze and break above major technical indicators as signs of a potential market bottom. However, more cautious voices argue that sustained momentum will require continued strong ETF inflows and a broader shift toward monetary easing.

Traders are now watching $80,000 as the next significant resistance level for Bitcoin. The area around the 200-day moving average at $69,000 is now viewed as a critical long-term support zone.