The cryptocurrency market experienced a sharp upward movement on Thursday, August 20, with the total crypto market capitalization reaching approximately $2.34 trillion. This represented a 9.32% increase from the previous day's low, driven by macroeconomic policy shifts in Washington and a wave of liquidations.
US Treasury Policy Lowers Bond Yields
The market movement was initiated by a US Treasury announcement to double its bond buyback operations to at least $4 billion per operation and increase their frequency from two to four per quarter, effective September 9. The policy aims to provide liquidity support following a period where long-term borrowing costs reached 2008 levels.
When the Treasury purchases its own bonds, bond prices rise while yields fall. Following the announcement, the 10-year yield dropped to 4.647% and the 30-year yield slid to 5.196%. Because safe debt began paying less, capital rotated back toward risk-on assets such as cryptocurrencies.
Massive Short Squeeze Amplifies Gains
Leveraged trading magnified the policy-driven bounce. Over a 24-hour period, $2.74 billion in short positions were wiped out, compared to $257 million in long liquidations, affecting 171,711 accounts. Because forced short positions require buying back assets to close, the resulting buying pressure propelled the market higher.
Bitcoin traders accounted for $1.42 billion in liquidations, while Ethereum traders saw $1.13 billion wiped out, predominantly on the short side. The total crypto market cap cleared $2.28 trillion before stalling near $2.38 trillion. Market analysis indicates that a close above $2.38 trillion could open the path toward $2.55 trillion, while a rejection could bring focus back to support levels at $2.33 trillion and $2.28 trillion.
Ethereum Leads Major Tokens
Ethereum (ETH) led major cryptocurrencies with an 18% jump, trading near $2,250. The move broke above the upper trendline of a rising channel that had contained the asset since June 26, accompanied by a surge in trading volume. Sellers halted the momentum at $2,288, with a daily close above that threshold potentially clearing the way to $2,579, while failure to hold could direct the price toward supports at $2,187 and $2,108.
Market analysts note that while squeezes can initiate rallies, sustaining an upward trajectory requires fresh spot demand and ETF inflows to prevent crowded long positions from turning into reversal pressure.
