Treasury Move Triggers Billion-Dollar Crypto Short Squeeze

The digital asset market experienced a severe leverage flush on Wednesday, as a sudden policy shift by the United States Treasury sparked a dramatic short squeeze. The flagship digital currency spiked by roughly 9% to reach an intraday high of $69,749, dismantling bearish bets and liquidating more than a billion dollars in heavily leveraged positions within a single hour.

The market rally was largely catalyzed by the U.S. Treasury Department's unexpected announcement that it will double its long-dated government debt buybacks. The department is increasing liquidity-support operations for 10- to 30-year securities from $2 billion to at least $4 billion per operation, according to reporting by CryptoSlate. This macroeconomic policy shift pushed the 30-year bond yield down to 5.187%, consequently weakening the dollar and making non-yielding digital assets suddenly more attractive to institutional buyers.

Forced Buying Accelerates the Surge

As bond yields retreated, the sudden upward price action in the cryptocurrency sector triggered a cascading effect across derivatives platforms. Traders who had borrowed assets to bet on a price decline were caught entirely off guard. When their margin collateral ran out, exchanges automatically force-closed their positions. This required them to purchase the asset back at market price, thereby driving valuations even higher and creating a feedback loop of continuous liquidations.

Data compiled by the analytics platform CoinGlass revealed that over $1.14 billion in short positions were wiped out in just 60 minutes. Zooming out to a 24-hour trading window, the destruction of bearish leverage was even more pronounced across the wider digital economy.

"Short liquidations accounted for $1.75 billion, their largest since the October 10 leverage flush, and represented the first major short squeeze in a long while," noted FXStreet analyst Michael Ebiekutan.

The liquidations were heavily concentrated in the top two crypto assets by market capitalization. Bitcoin shorts bore the brunt of the squeeze, with nearly $900 million in bearish bets destroyed, while Ethereum saw over $422 million in forced closures after the asset rapidly reclaimed the $2,000 psychological threshold.

Volatility Tests Market Confidence

Despite the rapid recovery from a prolonged period of consolidation, some market participants warned that the sudden spike was driven more by structural market mechanics, specifically the forced buying of a short squeeze, than organic retail adoption or fundamental network development. A highly crowded positioning structure had left bears vulnerable, but the violent upward correction also highlighted the market's enduring instability.

Researchers at the exchange KuCoin issued a cautious assessment following the event, noting that the extreme price action demonstrated the inherent dangers of leveraged derivative exposure. The exchange's research desk stated that "Bitcoin price prediction models may need a closer look as volatility rises."

Furthermore, while the push near the $70,000 mark represented the steepest single-day gain since early March, historical context tempers the enthusiasm. An analysis published by ChainGPT reminded market participants that despite the violent short squeeze, the flagship cryptocurrency remains far below its record peak above $126,000, which was established during the bull run of October 2025.