Wall Street and Washington Fuel Bitcoin Rally: Here's What's Going On
Bitcoin jumped above $79,000 as stronger institutional buying, improved macro conditions, and a softer U.S. regulatory outlook triggered a large short squeeze. The rally appears to have started before the latest breakout, driven by three factors: a weaker dollar and renewed “debasement trade” after expanded Treasury buybacks, lower perceived regulatory risk as Trump pushed crypto market-structure legislation, and rising spot demand through ETFs. U.S. spot Bitcoin ETFs saw heavy inflows, including about $517 million on Aug. 19 and $606 million on Aug. 20, with daily purchases reaching roughly 7,500 BTC. Analysts said Bitcoin’s break above $70,000 forced short covering and pulled momentum buyers back in. More than $4 billion in crypto shorts were liquidated over two to three days, including around $2.75 billion in Bitcoin shorts. While the Clarity Act may not dramatically change Bitcoin’s status, clearer rules are helping institutions price in less regulatory risk.
