Treasury Buyback Announcement Triggers Historic Crypto Short Squeeze
The cryptocurrency market has experienced a dramatic shift in momentum, with digital assets surging to break a 5-year record. The total crypto market cap climbed roughly 24% in a single week, adding over $474 billion in value to reach a staggering $2.67 trillion. This marks the largest weekly gain the crypto market has seen since February 2021.
The sudden reversal in market sentiment can be traced directly to macroeconomic policy shifts from Washington. On August 19, 2026, the U.S. Treasury announced it would double its maximum long-end debt buybacks for 10-to-30-year nominal coupon securities, beginning September 9. This purchase cap will increase from $2 billion to at least $4 billion per operation.
The announcement immediately weakened the U.S. dollar and lowered bond yields, nudging investors toward risk assets like cryptocurrencies and catching bearish traders entirely off guard. A historic short squeeze resulted in over $4 billion in liquidated short positions, with 172,202 traders wiped out in a single session on August 20.
Bitcoin supplied much of the price momentum, climbing 24% to briefly cross $81,250 for the first time since May before pulling back to consolidate near $79,250. From a technical perspective, Bitcoin moved decisively above its 200-day simple moving average (SMA) of $69,166, signaling a major structural change from the summer doldrums.