Bitcoin has extended its explosive August rally, climbing above $77,000 as strong institutional demand, a massive short squeeze and improving market sentiment push the cryptocurrency to its highest levels in months.
The move marks a major shift from just days ago, when Bitcoin was struggling to break above the $65,000–$66,000 range. On August 19, BTC surged toward $70,000 before breaking through the psychological level on August 20. By August 21, the rally had extended further, with Bitcoin topping $77,000.
The latest move suggests the rally is no longer being driven by forced short covering alone. Fresh money entering U.S. spot Bitcoin ETFs is providing evidence of renewed institutional demand.
Bitcoin rally gains momentum above $70,000
Bitcoin’s initial breakout accelerated on August 19, when BTC climbed from around $64,000 to nearly $70,000. The cryptocurrency reached approximately $69,700 during the session, representing an increase of nearly 9% from its intraday low.
The rally gathered even more momentum after Bitcoin reclaimed $70,000 on August 20. Reuters reported that BTC rose 3.48% that day and moved above $70,000 for the first time since June.
Bitcoin then continued higher, pushing beyond $72,000 before extending the move toward $77,000.
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That rapid recovery has changed the technical picture. The $70,000 level, which previously acted as major resistance, is now becoming an important level for bulls to defend.
Bitcoin ETF inflows show institutional demand is back
One of the strongest signals behind the rally is the return of money to U.S. spot Bitcoin ETFs.
On August 19, U.S. spot Bitcoin ETFs recorded approximately $517.2 million in net inflows, their largest single-day inflow since early May. The strong inflow pushed August’s cumulative ETF inflows to about $1.47 billion at the time.
The buying did not stop there.
U.S. spot Bitcoin ETFs reportedly attracted another $606 million on August 20, while Ethereum ETFs added about $221 million. The consecutive inflows strengthen the argument that the latest Bitcoin rally is being supported by actual investment demand rather than leverage alone.
BlackRock’s IBIT was among the biggest contributors to the August 19 inflows, bringing in roughly $285 million.
This renewed ETF demand is particularly significant because institutional flows had been a major source of pressure on Bitcoin earlier in the month.
Massive short liquidations accelerate Bitcoin’s rise
While ETF demand has provided a fundamental boost, derivatives markets have amplified the move.
As Bitcoin broke through key resistance levels, traders betting against the cryptocurrency were forced to close their positions. That created additional buying pressure and helped push BTC higher.
Data cited during the rally showed billions of dollars in crypto positions being liquidated, with short positions accounting for the overwhelming majority. Some reports placed total short liquidations around $2.7 billion, while later figures put total crypto liquidations above $3 billion as Bitcoin moved beyond $72,000.
This is known as a short squeeze.
When heavily leveraged traders bet that Bitcoin will fall and the price instead rises sharply, exchanges can automatically close those positions. The forced buying can then push the price even higher, triggering more liquidations.
That appears to have played an important role in Bitcoin’s rapid move from the mid-$60,000s to above $70,000.
Why the U.S. Treasury helped Bitcoin
Another important catalyst came from the U.S. Treasury.
The department announced plans to double the size of some long-term Treasury bond buybacks from $2 billion to at least $4 billion per operation, beginning in September.
The announcement pushed long-term Treasury yields lower initially and weakened the dollar, creating a more favourable environment for risk assets such as Bitcoin and gold. Reuters reported that the move helped trigger gains across financial markets, including cryptocurrencies.
The Treasury move should not be confused with quantitative easing, however. Reuters noted that the buyback programme is relatively modest and is not equivalent to the Federal Reserve creating new money.
Still, the announcement changed market expectations and helped provide the spark for Bitcoin’s breakout.
Ethereum and the wider crypto market are also rallying
Bitcoin is not moving alone.
Ethereum has also posted strong gains during the latest crypto rally, with ETH breaking above $2,000 and subsequently moving above $2,300 in reports covering the continued advance. Ethereum’s strength suggests the move is spreading beyond Bitcoin rather than being limited to one cryptocurrency.
Crypto-related stocks have also benefited from the improved sentiment. Reuters reported gains across companies including Coinbase, MicroStrategy and Circle following the Treasury announcement and broader optimism around U.S. crypto policy.
Can Bitcoin hold above $70,000?
The next challenge for Bitcoin is no longer simply reaching $70,000. It is proving that the cryptocurrency can hold above the level after the initial breakout.
The speed of the rally means some of the recent gains have been driven by forced liquidations. If short-covering begins to fade, Bitcoin will need continued spot demand to maintain its momentum.
That makes the latest ETF figures particularly important.
Continued inflows would provide evidence that institutional buyers are supporting the rally even after the short squeeze loses steam. Conversely, a sharp reversal in ETF flows could make Bitcoin more vulnerable to profit-taking.
For now, however, the market has clearly moved away from the range-bound conditions that dominated earlier in August.
Bitcoin’s climb from roughly $64,000 to above $77,000 in just a few sessions has been powered by a combination of institutional ETF demand, Treasury-driven macro optimism and aggressive short liquidations.
The big question now is whether Bitcoin can turn its latest breakout into a sustained move higher.
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