Bitcoin rebounds above $78,000 as shorts unwind and institutions split on what comes next

Bitcoin climbed back above $78,000 on August 21, rising more than 9% in 24 hours and more than 20% over the past three trading sessions. The move pushed the token to its highest level since May 27. Other cryptocurrencies rose with it. Dogecoin gained more than 10%, while Ether added 7%. Pre-market trading also turned higher for crypto-linked stocks, with Strategy up more than 6% and Coinbase and Circle each up more than 4%. Coinglass data showed more than 160,000 traders were liquidated over the past 24 hours, for a total of $1.321 billion. Short positions accounted for $1.149 billion of that sum. The rebound came after a deep slide that had dragged Bitcoin from its October 2025 all-time high of $126,000 to about $57,000 in early July 2026. At the low point, the token briefly fell below $60,000. The article said the maximum drawdown from the peak was roughly 54%. A turning point arrived on August 19, when the U.S. Treasury said it would raise the cap on long-term bond buybacks from $2 billion to at least $4 billion. The move was aimed at easing pressure from rising long-end yields. It also helped push the 30-year Treasury yield down from a near-20-year high, which traders took as a sign that liquidity conditions could improve for risk assets. HashKey Group senior researcher Sun Wei told Caijing that the rally was not just a headline-driven move. He said the market had built up a large number of leveraged short positions over the past few months, and crowding became obvious once Bitcoin started to move above $65,000. He pointed to the Treasury buyback expansion, pro-crypto remarks from U.S. President Donald Trump at a tech leaders event, and new SEC regulatory exemptions as the catalysts that forced shorts to cover. New Fire Research Institute said the derivatives market saw more than $1.3 billion in short liquidations on August 19. In its view, the sequence of forced liquidations, price gains and further liquidations created a feedback loop that pushed Bitcoin quickly above $70,000. The firm also said the setup did not appear out of nowhere. On-chain data showed institutional buyers, including entities with public-company backgrounds and money linked to well-known crypto figures, were buying aggressively around the $60,000 level before the squeeze began. At the same time, New Fire Group’s over-the-counter business posted July turnover that was 257% higher than June. The firm said both on-chain and OTC data pointed to a clear rise in spot demand from institutions ahead of the move. Sun said that unless the external macro backdrop deteriorates, another sharp drop below $80,000 looks less likely for now. He argued that the prior correction had already washed out a large amount of speculative leverage and that improving liquidity expectations leave less resistance to further upside. Views on the next leg are still divided. Liquid Capital founder Yi Lihua wrote on social media that Bitcoin’s break above the 120-day and 200-day moving averages on the daily chart, along with its move above the 20-week moving average on the weekly chart, means the bear trend is over. He said the fall from $126,000 to $57,000 marked a cycle low and that a return to $50,000 looks unlikely. He also warned that even if the next two weeks remain constructive, a pullback could still arrive after a run higher, and leveraged traders should cut long exposure. Sun offered a more cautious read. He said the $75,000 to $80,000 area is the key resistance band and that there is not yet enough evidence to call a full trend reversal. Trading volume has not expanded materially, and as upside momentum and fresh catalysts fade, a second test lower cannot be ruled out. Even so, he said any retest would likely hold above the previous low. New Fire Research Institute made a similar case, describing crypto as still a high-value zone and saying the market is gradually moving away from pure narrative trading toward a phase shaped by rules and liquidity. The firm said it had been warning since mid-May that the market had entered a high-value zone, and repeated that view around $63,000 in early July. From a longer-term allocation view, BlackRock reiterated Bitcoin’s portfolio role in its latest report. The firm said this more-than-50% drawdown was mainly driven by de-leveraging in crypto and a shift in capital flows, and did not break the long-term investment case. Its updated 10-year analysis said that in a classic 60/40 stock-and-bond portfolio, a 1% to 2% allocation from equities into Bitcoin could improve returns while keeping risk broadly unchanged. BlackRock also said rising government debt and persistent fiscal deficits make Bitcoin a potential hedge against fiat currency debasement. Geoff Kendrick, head of digital assets research at Standard Chartered, was even more bullish. He said Bitcoin could reach $100,000 by the end of 2026 and called the Treasury’s liquidity injection “the most Bitcoin-friendly news.” In his view, a fixed-supply asset like Bitcoin should benefit from easier monetary conditions, and the latest wave of liquidity has only just started to build.