Bitcoin Surpasses $68,000 as U.S. Treasury Buybacks Trigger Massive Short Liquidations

Treasury Bond Buybacks Spark Market Rally

Bitcoin traded above $68,000 and ether gained 9% on Wednesday following an announcement from the U.S. Treasury. The department stated it would at least double the size of its liquidity support buyback operations in the 10-to-20-year and 20-to-30-year nominal coupon sectors, raising the maximum size from $2 billion per operation to at least $4 billion. The move reversed a bond market selloff that had pushed the 30-year yield to its highest daily close since June 2007, sending the 30-year yield down to 5.21% and the 10-year yield to 4.66%.

The broader crypto market followed the bond reaction with a delay of about three hours, rising 5.1% in total market value to $2.41 trillion. Bitcoin reached $68,605, up 5.8% over 24 hours, while ether climbed to $2,086. Other assets also posted gains, with XRP adding 6.9% to $1.07, Solana rising 6.5% to $81.67, and BNB gaining 2.3% to $619.

Short Squeeze Flushes $1.91 Billion

The sudden market shift caught heavily shorted positions off guard, forcing $1.91 billion of leveraged positions to close globally according to Coinglass data. Short positions accounted for $1.74 billion—or roughly 91%—of the day's total liquidations, representing roughly eight times the volume recorded over the previous 24 hours.

Within a four-hour window, $1.78 billion in liquidations occurred, affecting a total of 122,893 traders. Bitcoin accounted for $1.10 billion of short liquidations against $33.9 million of longs, while ether recorded $463 million in short liquidations against $46.8 million in longs. The single largest liquidated order was a $48.8 million bitcoin position on Hyperliquid. Binance led exchanges with $530 million in liquidations over the four-hour period, followed by Hyperliquid at $513 million and Bybit at $303 million.

Institutional Inflows and DeFi Metrics

U.S. spot bitcoin ETFs recorded net inflows of $297.5 million and $189.3 million, effectively reversing $385.2 million in net outflows from the previous week. Spot ether ETFs also saw strong demand, taking in $71.4 million. Meanwhile, total value locked (TVL) in decentralized finance rose to $78.1 billion from $74.7 billion.

Governance tokens and select protocols experienced notable activity. Gnosis rose 11% following a community vote approving GIP-153 to convert Gnosis Chain into a ZK-proven rollup settling on Ethereum. Cypherpunk Technologies acquired a major Zcash mining fleet in a $33.33 million transaction, pushing Zcash up 8.8% to $559.66. U.S. regulatory updates also remained in focus after the SEC proposed Regulation Crypto Assets, which outlines two registration exemptions for token offerings and a conditional safe harbor for investment contracts.