Bitcoin jumps past $69,000 as $2.7 billion in short liquidations fuels sharp squeeze

Bitcoin rallied sharply on Aug. 20 (UTC+8), rising from around $64,000 to above $69,000 intraday and posting a gain of more than 7% on the day, according to ME News. Crypto-market short liquidations topped $2.7 billion, setting off a major short squeeze. Xinhuo Research Institute said the rebound was not driven by a single event. Instead, it reflected a concentrated release of price pressure as an overcrowded short structure collided with supportive regulatory signals, easing long-term rates and broader capital inflows. The most immediate driver was the unwind of heavy short positioning built during roughly six months of consolidation. With Bitcoin trading in a tight range near $60,000 for an extended period, leveraged shorts accumulated in derivatives markets. Once prices pushed through a key liquidation zone, forced liquidations cascaded, prompting widespread short covering. The resulting chain reaction of buy orders amplified the move in a classic short-squeeze feedback loop. Xinhuo noted that signs of institutional spot accumulation had appeared before the derivatives squeeze. Based on on-chain activity and OTC market observations, institutional funds with corporate backgrounds and "ancient whale" traits were seen buying aggressively near the key $60,000 level. Xinhuo Group's OTC trading volume in July also hit a record, surging 257% month over month from June. Together, the on-chain and OTC indicators suggest spot-buying demand from institutions had already strengthened materially ahead of the rally, providing a firmer liquidity base for the rebound. On the policy front, U.S. regulatory developments were cited as an additional confidence boost. The U.S. SEC unveiled a new regulatory framework for crypto assets featuring a safe-harbor mechanism: projects may raise up to $5 million in an initial phase and up to $75 million annually in the regular phase; after completing compliance governance, a project's classification as a security may be lifted. Xinhuo said the framework could reduce uncertainty around compliant fundraising for early-stage crypto projects. The White House also hosted a crypto industry summit, and Trump again publicly urged Congress to advance the CLARITY Act. Xinhuo said the string of policy tailwinds has led new capital to reassess crypto risk pricing. Macro liquidity conditions also improved at the margin. After the U.S. 30-year Treasury yield hit its highest level in nearly two decades, the U.S. Treasury said it plans to at least double the scale of long-term bond buybacks, pushing the 30-year yield down from 5.337% to 5.189%. Gold rose 4.33% over the same period. Xinhuo said lower long-term rates can create room for Federal Reserve policy adjustment, offering liquidity support to high-beta risk assets. Sector rotation dynamics were also highlighted. Funds that had previously crowded into AI are showing signs of returning. As Anthropic's Q2 revenue growth slowed further, markets began revisiting return expectations across assets, reviving interest in crypto. New Fire Research said its team has argued since mid-May that the market entered a high-value zone, reiterating the view on July 6 and July 13 when Bitcoin traded near $63,000. It said the combination of whale accumulation signals, a jump in OTC volumes and the short-squeeze-led surge supports the view that the market is accelerating a structural shift from panic selling toward long-term accumulation. Xinhuo concluded that the rebound reflects multiple forces: expectations for clearer regulation, falling long-term rates releasing liquidity, the one-time unwind of crowded shorts built during consolidation, and shifting capital allocation trends. The institute maintains that the crypto market remains in a "high-value zone" and is moving from a purely narrative-driven phase toward one jointly shaped by regulatory clarity and liquidity. It added that while volatility could moderate, trend durability may improve. (Source: Xinhuo Research Institute)