Bitcoin rose above $72,000 on Thursday for the first time since May, extending a rapid advance that followed $2.75 billion in liquidated bitcoin short positions the previous day. The cryptocurrency was trading near $72,345 at publication, with the move placing attention on whether the market can sustain prices above the closely watched $70,000 level after a sharp short squeeze.
Wednesday’s liquidation wave was described as the largest recorded across crypto markets. Short liquidations occur when traders who have borrowed or used derivatives to bet on lower prices are forced to close those positions as prices rise. Those closures often require buying the underlying asset or related contracts, adding momentum to an existing rally.
The scale of the move suggests bitcoin’s advance was driven by more than a gradual accumulation of spot buying. Once the price began moving through resistance, bearish leveraged positions appear to have amplified the rise. That dynamic can produce fast breakouts, though it can also leave the market vulnerable when speculative traders begin adding long exposure after the initial squeeze.
Demand signals improve after October peak
Ki Young Ju, founder of blockchain analytics platform CryptoQuant, said bitcoin demand had turned positive in both spot and perpetual futures markets for the first time since the cryptocurrency’s all-time high in October 2025.
Spot demand refers to direct purchases of bitcoin, while perpetual futures are derivatives contracts that allow traders to take leveraged positions without a fixed expiry date. A simultaneous improvement in both areas can indicate that the rally has support from cash-market buyers as well as derivatives activity, rather than relying solely on liquidations.
Ju characterized the demand improvement as modest and said a more durable signal would require the pattern to persist for another month. That qualification matters after a sudden liquidation event: derivatives positioning can change within hours, while sustained spot demand and continued inflows into bitcoin exchange-traded funds would provide a stronger test of whether the move has deeper support.
The market had been through a period of low volatility and thin liquidity before the breakout. Those conditions can make digital-asset prices more sensitive to large orders or fast-changing macroeconomic expectations, since fewer bids and offers are available near the prevailing price. A relatively small initial rise can then trigger stop orders and liquidations, producing a larger move than the original buying pressure alone would have generated.
Macro and policy developments add to the trading backdrop
Bitcoin’s advance coincided with a busy period for U.S. policy and financial markets. Traders were reacting to expanded U.S. Treasury buybacks, a Securities and Exchange Commission crypto proposal, and a White House meeting involving President Donald Trump and senior cryptocurrency executives.
Falling long-end Treasury yields were also cited alongside returning bitcoin ETF flows as supportive conditions. Lower long-dated yields can improve the relative appeal of assets whose value depends heavily on future growth expectations or liquidity conditions, although bitcoin’s price action remains heavily influenced by crypto-specific leverage and positioning.
The Treasury is expected to double its bond buybacks to $4 billion per operation beginning September 9, according to the information provided. Buybacks allow the government to repurchase outstanding Treasury securities, potentially supporting liquidity in parts of the bond market. Their effect on the dollar, risk assets, and bitcoin is less direct than the response to a monetary-policy decision, and traders will likely focus on whether bond yields and broader risk sentiment continue moving in bitcoin’s favor.
Another date on the market calendar is a Senate vote on a proposed crypto market-structure bill scheduled for September 15. Legislation governing market oversight, trading venues, and the division of authority between U.S. regulators could affect how domestic crypto businesses operate. The immediate market reaction, if any, will depend on the bill’s provisions and its prospects beyond the vote.
The $70,000 level becomes the immediate test
Bitcoin’s ability to remain above $70,000 is likely to be the near-term measure of whether the rally can settle into a more stable advance. Analysts cited in the supplied material identified the $69,700 to $69,000 area as a potential retest zone if prices retreat after the breakout.
A retest would not automatically reverse the bullish market structure. Markets frequently revisit a former resistance level after moving above it, testing whether sellers have been absorbed and whether buyers are willing to defend the new range. A failure to hold that area, particularly if ETF demand weakens or leveraged longs build rapidly, would indicate that much of the surge was tied to the short squeeze rather than a lasting shift in demand.
The focus on funding and positioning has become more pressing as the short liquidation event eases. Short sellers were forced out during the climb, but a fast move above a major round-number level can attract leveraged buyers expecting the rally to continue. That can make the market increasingly sensitive to a modest decline, as long positions may face their own liquidation pressure.
XRP and Ethereum join the advance
The rally was not limited to bitcoin. XRP gained 20% over the previous 24 hours, while Ethereum also moved higher with the broader crypto market. The synchronized gains suggest that improved risk appetite and liquidations were affecting large-cap tokens beyond bitcoin, rather than reflecting a single-asset development.
That breadth does not guarantee a sustained sector-wide rally. XRP and Ethereum have distinct market structures, supply dynamics, and catalysts, while smaller markets can move more sharply during periods of rising volumes. Yet their participation reduces the appearance of an isolated bitcoin spike and points to a wider release of risk appetite after a subdued trading period.
Bitcoin’s move above $72,000 has shifted the immediate conversation from breaking resistance to defending it. Continued spot demand, ETF activity, Treasury-market conditions, and the balance between new leveraged longs and remaining short sellers will determine whether the breakout develops into a steadier advance or retraces toward the levels it has just cleared.
Wondering if this breakout can last? Deepen your insight with our latest outlook in this analysis now.
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