The crypto market has experienced a truly historic wave of liquidations in the last few days, and this figure, exceeding $5 billion, is the result of a convergence of several separate catalysts.

The main explosion occurred on August 19th, with $2.99 billion worth of positions being forced to close in a single day, marking the eighth largest liquidation event to date. Some sources put this figure as high as $3.5 billion, depending on the measurement method. The most striking aspect of the figure is that the overwhelming majority of liquidated positions were short; approximately 92% of the total, or $2.74 billion, consisted of leveraged positions anticipating a decline, while only $254 million was lost on the long side. This kind of one-way liquidation is the clearest indication of a classic short squeeze.

Bitcoin surged from an intraday low of around $64,100 to $69,700, and according to some sources, even higher, surpassing $72,000 – its highest level since early June. Ethereum reacted even more strongly, rising over 18% in a single day to $2,257 – its strongest single-day move since March 2024.

Several separate developments acted as triggers for this movement. The US Treasury Department announced it was doubling liquidity support by increasing the maximum size of long-term bond repurchase operations from $2 billion to $4 billion per transaction, suppressing yields and supporting risk assets. At the same time, news spread that Trump would be hosting a crypto summit at the White House, attended by senior SEC officials and executives from major exchanges, signaling the administration's continued commitment to a supportive regulatory framework for the crypto sector. Trump also declared the "war on crypto is over," hinted at potential US bitcoin purchases, and called for the immediate passage of the CLARITY Act.

Liquidations continued in the days immediately following this single-day event, with some analyses indicating a total of over $3 billion in short liquidations on August 19th and 20th, the largest concentrated short squeeze since November 2021. A separate estimate from Kobeissi Letter suggests $3.5 billion in liquidations occurred within a twenty-four-hour window, making it the seventh largest such event in history. When these different measurement windows and methodologies are combined, it seems quite possible that the total figure for the last 72 hours exceeded $5 billion.

This rally is driven not only by short position closures but also by real demand; US-based spot bitcoin ETFs recorded a daily inflow of $517.2 million on August 19th, the strongest single-day inflow in recent times. But it's too early to say the macroeconomic side is completely resolved; bond yields have rebounded after the initial drop, with the 10-year yield returning to around 4.69%, indicating that the Treasury's intervention hasn't completely allayed concerns.

For those following these kinds of leveraged market movements through Gate, the key point is that a short squeeze of this magnitude represents less of a fundamental change and more of a forced correction of an overly one-sided positioning. The sustainability of the rally will depend on whether ETF inflows continue at this pace and whether concrete steps are taken after the regulatory summit; a single purge, however large, is not a guarantee of a lasting trend change.

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