Crypto Stocks Rally as Record $2.7 Billion Short Squeeze Propels Bitcoin Higher

A historic short squeeze wiped out a record $2.7 billion in bearish cryptocurrency bets within a 24-hour period Wednesday, the largest such event in records going back to 2021. The massive liquidation propelled Bitcoin to its highest price since early June and triggered a broad rally in crypto-linked stocks during premarket trading on Thursday.

Record Liquidations Fuel Market Surge

The intense market move saw more than $1 billion in Bitcoin short positions forcibly closed in just one hour, according to data from Coinglass. The analytics firm described the event as Bitcoin's "first-ever daily billion-dollar short liquidation volume." Following the squeeze, Bitcoin briefly touched $69,900 before extending to $71,396.50.

Data from Coinglass showed the liquidations were widespread across major trading venues. Over a four-hour window, Binance recorded approximately $517.6 million in liquidations, while Hyperliquid saw $513 million and Bybit processed $303 million.

Crypto-Exposed Equities Climb

The surge in both Bitcoin's price and trading volume provided a strong tailwind for publicly traded companies with exposure to the digital asset market. These firms, whose revenues are often tied to crypto prices and transaction activity, saw significant gains in premarket trading.

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Key movers ahead of Thursday's open included:

• MicroStrategy (MSTR): +7.8%
• Coinbase (COIN): +7.6%
• Circle Internet Group (CRCL): +5.6%
• Robinhood Markets (HOOD): +5.3%
• MARA Holdings (MARA): +4.4%
• Riot Platforms (RIOT): +3.5%

Favorable Regulatory Backdrop

The market rally coincides with recent developments in Washington that have been perceived as favorable by the industry. On Wednesday, President Donald Trump hosted several crypto executives at the White House, including the CEOs of Coinbase and Robinhood, Reuters reported. During the meeting, Trump urged Congress to advance crypto legislation.

This follows the SEC's August 18 publication of a 402-page proposed rulemaking for digital assets. SEC Chair Paul Atkins described the proposal as "the most historic step yet to modernize federal securities regulations for crypto assets." However, while comprehensive legislation has made some progress in Congress, a recent Reuters report noted that a key bill has stalled amid a crowded legislative calendar.