- Bitcoin climbed above $75,000 for the first time since late May.
- More than $2.7 billion in Bitcoin short positions were liquidated as prices surged.
- Analysts remain divided over whether the rally has enough fresh demand to last.
Bitcoin has pushed back above $75,000, reaching its highest level since late May as a combination of falling US Treasury yields, stronger trading activity and renewed hopes for clearer cryptocurrency rules sent digital assets higher.
The cryptocurrency reached about $75,700 on Friday (21) and was trading around $75,350, up roughly 9 per cent over 24 hours. The rally was not limited to Bitcoin, with Ethereum gaining around 5 per cent and XRP jumping almost 19 per cent.
Bitcoin is now up about 19 per cent over the past week, while Ethereum has gained around 26 per cent and XRP almost 30 per cent.
The question for investors is whether the move marks the beginning of a broader recovery or whether traders are simply being caught on the wrong side of a sharp market move.
Why did Bitcoin suddenly jump?
One of the biggest immediate drivers was the US Treasury's decision to increase purchases of longer-dated government bonds.
The Treasury said it would at least double its bond buyback operations from $2 billion to $4 billion per transaction between September 9 and November 4.
The announcement helped push the 30-year Treasury yield down from around 5.34 per cent towards 5.20 per cent.
Lower bond yields can make riskier assets such as cryptocurrencies more attractive, although analysts are divided over how significant the move actually is.
The rally was also helped by developments in Washington.
President Donald Trump met executives from major cryptocurrency companies including Coinbase, Ripple, Robinhood and Kraken on August 19 and urged Congress to pass a version of the CLARITY Act.
The proposed legislation aims to establish clearer rules around whether different digital assets should fall under the supervision of the Securities and Exchange Commission or the Commodity Futures Trading Commission.
A Senate vote is scheduled for September, giving traders another potential catalyst to watch.
The rally has already hurt the bears
The sharp move higher has been particularly painful for traders who had bet that Bitcoin would fall.
Around $2.75 billion of Bitcoin short positions were liquidated on August 19, according to CoinGlass data. A further $783 million in Bitcoin positions were liquidated over the following 24 hours, including around $748 million in short positions.
That forced selling helped push prices higher as traders who had bet against Bitcoin were forced to close their positions.
But that also raises a question over how much of the rally represents genuine demand.
Some analysts have warned that the Treasury's bond-buying plans may have been given too much importance by crypto traders. Rather than signalling a fundamental change in financial conditions, the move could simply have triggered a rapid unwinding of crowded short positions.
Others argue that the rally will need to attract fresh buyers once those short positions have disappeared.
Dominic John of Zeus Research reportedly said short liquidations could lift prices in the short term, but the market would eventually need genuine spot demand, liquidity and stronger economic conditions to maintain the advance.
The potential passage of the CLARITY Act could provide another boost if expectations of approval become more realistic.
For now, market sentiment has clearly improved. Bitcoin's Fear & Greed Index stood at 62, putting it in the “Greed” category and marking its highest reading since October 2025, when Bitcoin reached a record high.
That does not guarantee another crypto boom.
For Bitcoin, the next test may be less about whether it can cross $75,000 and more about whether buyers keep showing up after the traders betting against it have been forced out.
