The cryptocurrency market recorded one of its strongest trading periods in recent months over the past few days. As of Thursday morning, Bitcoin was trading at around $69,700, a jump of about 8.5% in a single day it approached the $70,000 threshold, after trading near $64,000 on Wednesday
However, the standout performer of the rally was Ether. The world’s second-largest cryptocurrency surged by approximately 17.5% and traded around $2,244, after climbing to a daily peak of about $2,328. Trading volume in ETH soared more than fourfold compared to recent daily averages. The broader market joined the rally as well: Solana rose about 11% to around $85, and XRP climbed more than 10% to around $1.10.
The primary catalyst originated from a market seemingly far removed from crypto. The US Department of the Treasury announced that starting in September, it will at least double the scope of its buybacks of long-term government bonds, increasing from $2 billion to at least $4 billion per operation.
The move followed a rise in the yield on 30-year US Treasury bonds to levels not seen since 2007. The announcement quickly drove yields down, weakened the US dollar, and boosted risk appetite across markets. Certain stocks and gold also reacted with gains.
It is important to note that this does not constitute a new round of quantitative easing or “money printing.” The US bond market is valued at more than $32 trillion, making the scale of these buybacks relatively small. The Treasury’s primary goal is to improve market liquidity. Nevertheless, for investors, the government’s willingness to intervene after a surge in yields provided a significant signal.
The gains received additional momentum from the derivatives market. According to CoinDesk, approximately $1.4 billion in short positions were liquidated in just four hours, as traders who had bet on further declines were forced to buy back assets to close their transactions. Additional estimates put the total forced liquidations over the past few days at nearly $2 billion.
Washington also provided a regulatory boost. President Donald Trump hosted senior executives from the crypto and finance industries at the White House and called on Congress to advance the CLARITY Act, while the SEC is advancing a new regulatory proposal for digital assets.
After months in which high interest rates, bond yields, and macroeconomic pressures weighed heavily on cryptocurrency, the market received an almost perfect alignment of falling yields, a weaker dollar, positive regulatory news, and a severe short squeeze. The question now is whether this marks the beginning of a new trend or a short-term spike driven primarily by deleveraging. What is certain is that after a prolonged period of relative quiet, volatility has returned to the market.
