Bessent Bond Buybacks Trigger $1.6B BTC Short Squeeze
U.S. Treasury Secretary Scott Bessent expanded liquidity-support buybacks for long-dated bonds, raising the size to at least $4B. The announcement landed when crypto markets had low volatility and crowded derivatives positioning, helping trigger a broad short squeeze and a crypto market rally.
Over 24 hours, more than $1.6B in liquidations hit, including $800M+ of short liquidations within about an hour. BTC jumped ~23% to around $79K (three-month high). The move broadened beyond Bitcoin into major coins and higher-beta tokens.
Venue data pointed to concentrated pressure on Binance and Bybit. BTC/ETH liquidations across the two exchanges totaled over $2.1B. Liquidations were largely one-sided: BTC, ETH, SOL and ZEC saw short-dominated prints, with many positions liquidated in the 90%+ short range.
Trading activity surged. Spot volume nearly tripled to about $1.41B per hour (with a ~$7.27B peak). Futures volume also doubled, rising from ~$3.57B to ~$7.77B per hour.
Demand signals mattered for follow-through. Bitcoin ETFs reported about $1.67B in net inflows, while exchanges saw roughly $3.07B in BTC outflows. The report also cited improving macro/market linkage, including BTC’s 30-day correlation to gold rising toward ~0.6.
Traders should watch whether this BTC short squeeze turns into sustained spot-driven strength. Key checks: BTC ETF/spot flows, funding rates, and whether derivatives open interest continues to rebuild (not just a quick reset).
Bullish
The Treasury’s expanded bond buybacks improved liquidity conditions and compressed volatility, which helped trigger a heavily one-sided liquidation cascade. Short liquidations were large and fast, and BTC rallied to a multi-month high, suggesting strong momentum from crowded derivatives.
At the same time, the later article adds stronger “follow-through” context: Bitcoin ETFs saw sizable net inflows and exchanges recorded BTC outflows, which points to real spot demand supporting the rally rather than purely leverage-driven price action. If funding and open interest keep stabilizing or rebuilding while ETF/spot flows remain constructive, the initial BTC short squeeze can evolve into a more durable trend.
However, both articles implicitly acknowledge risk around leverage normalization and the temporary nature of the catalyst. If funding turns overly positive or open interest declines sharply again, the move could fade into mean reversion. For the price impact on BTC itself, the net takeaway is bullish in the near term, conditional on continued spot/ETF support.