Bitcoin's Short Squeeze and the CLARITY Act Push

A crypto trader on Hyperliquid spent most of 2026 looking like a genius, up $49 million shorting a market that refused to go anywhere. On Wednesday the same wallet lost $24 million on a single ether short in roughly twelve seconds. That was the flavour of the week.

Bitcoin crossed $70,000 for the first time since June and kept running, climbing about 25% from around $64,000 to nearly $78,500 by Saturday. Ether did the real damage to the bears, spiking close to 19% in 24 hours at one point on Wednesday. Between Thursday and Friday roughly $4 billion of bearish crypto positions were liquidated, and a market that had done nothing for months could not stop moving.

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A bond tweak lit the fuse

The spark came from an unlikely place, the US Treasury. Its decision to double long-dated bond buybacks nudged the 30-year yield down from a 19-year high, and falling yields make non-yielding bitcoin marginally more attractive. Veteran bond investor Mark Connors went as far as arguing the shift could tee up a run toward $180,000. Most analysts were more sober. ‘Crypto is giving the Treasury’s intervention far more credit than it deserves,’ said MEXC Research’s Shawn Young. ‘The violence of that squeeze suggests positioning was already dangerously one-sided.’

He is right that the fuel was positioning. When a crowded short trade gets a shove, forced buying begets more forced buying, and the move overshoots. Spot bitcoin ETFs added roughly $650 million of net inflows on the week, per CoinDesk, giving the squeeze real demand underneath it rather than pure liquidation mechanics.

Washington stopped waiting

The policy backdrop turned friendly at the same time. President Trump hosted crypto and finance executives at the White House on 19 August and pressed Congress to pass the CLARITY Act, the bill that would settle whether most tokens are securities or commodities. Regulators did not wait for the vote. The CFTC told staff to draft rules in case the bill stalls, the SEC floated a first crypto-specific rule it is calling Regulation Crypto, and the Treasury proposed rules to implement the GENIUS Act stablecoin law.

Hyperliquid’s HYPE token jumped 11% after Trump said the CFTC was working to bring the exchange onshore. Zcash, of all things, ran 48% past $800 for the first time since 2016 on Grayscale ETF chatter. When the privacy coins are flying, the animal spirits are back.

Stablecoins are eating payments

Away from the price fireworks, the more durable story was stablecoins muscling into mainstream payments. Mastercard bought crypto-payments firm BVNK for $1.8 billion, which sent Visa hunting for a new settlement partner. HSBC and Standard Chartered ran the first live bank transaction on Swift’s 24/7 ledger. And Elon Musk’s X was reported to be exploring stablecoin payouts for creators. Michael Saylor’s Strategy, meanwhile, sat on about $1.4 billion of paper profit on its bitcoin pile as prices climbed.

Does it hold?

That is the $78,000 question. Squeeze-led rallies carry a health warning because liquidations do the lifting, and once the shorts are gone the buying can dry up. Bitfinex analysts flagged the risk that the volume of bitcoin moved to exchanges in profit could become ‘the largest profit-taking wave of the year’. Jefferies’ Andrew Moss is watching the 15 September Senate cloture vote on the CLARITY Act as the next real test. For now, bitcoin has to prove it can hold above roughly $69,000, its 200-day average, against a Treasury bond paying nearly 5% for doing next to nothing. (Not investment advice.)

Did you know: more than $4 billion in crypto short positions were wiped out in two days, one of the biggest bearish liquidations on record.

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