Over $1.18 Billion in Short Positions Liquidated in One Hour! Bitcoin Surges Nearly 8%, Approaching $70K Amid Largest Short Squeeze Since 2021

After months of heavy selling pressure, Bitcoin dramatically reversed between August 19 and 20, spiking nearly 8% to a high of approximately $69,500—the highest since June and the largest single-day gain since March—triggering the biggest short squeeze since 2021.

Data from Coinglass shows that over $1 billion in Bitcoin short positions were liquidated within just one hour, highlighting the speed of the price reversal. Total market-wide liquidations over 24 hours climbed to $1.44 billion, with over 80% being long positions, making Bitcoin and Ethereum the most impacted assets.

The immediate catalyst was a confluence of macroeconomic and policy signals: the U.S. Treasury expanded its long-term debt buyback program, and the 30-year yield dropped from around 5.22%, lowering borrowing costs and increasing the relative appeal of non-yielding risk assets.

Additionally, former U.S. President Donald Trump met with top executives from major crypto firms including Coinbase, Payward, and Blockchain.com Group Holdings at the White House, further boosting market optimism about positive government developments in digital assets. At the same time, the U.S. Securities and Exchange Commission (SEC) is considering easing registration exemptions for certain tokens, strengthening expectations of a 'crypto-friendly regulatory environment'.

Axel Rudolph, Chief Technical Analyst at investment and trading platform IG, said: 'Driven by short covering, Bitcoin is moving towards $70,000, showing buyers are regaining confidence. However, this rebound now faces a critical test: whether it can sustain momentum and challenge the $75,000 range.'

Prior to this, after Bitcoin broke below the $60,000 mark, short positions had become heavily concentrated. Thin order books and some platforms offering up to 100x leverage meant even a minor price breach of key thresholds triggered a chain reaction of forced liquidations.

This microstructural imbalance—'technical breakdown → forced sell-off → liquidity evaporation'—led to liquidations far exceeding normal adjustments based solely on fundamental changes, impacting both retail and institutional investors alike. While futures open interest surpassed $90 billion last October, the drop below $60,000 in June made this round a necessary unwinding of overcrowded positions.

Alongside speculative position cleanup, institutional capital flows showed divergence. In the week ending August 14, BlackRock’s iShares Bitcoin Trust (IBIT) saw a net outflow of $78.9 million, with U.S. spot ETFs collectively recording $389.7 million in net outflows. However, as of August 12, IBIT’s assets still reached $47.3 billion, and BlackRock continues to recommend allocating 1%–2% of portfolios to Bitcoin.

Experts note that half of this Bitcoin rally was driven by buying demand, and the other half by shorts buying back their own positions. It proves market resilience while exposing the triangular vulnerability of 'high leverage + thin order books + macro sensitivity' under the spotlight. The $70,000 level is not a bull-bear dividing line, but rather the first litmus test for future ETF inflows and regulatory implementation.