Bitcoin’s recent rally may be pointing to a broader reset in the crypto market after months of weakness, according to K33 and Bitwise analysts cited by The Block. They linked the move to a historic short squeeze and macro changes tied to U.S. Treasury Secretary Scott Bessent’s push for intervention in the bond market.
Data cited in the report showed Bitcoin gained about 23% over the past week, its strongest weekly performance since the rebound that followed the November 2024 election.
Volumes, basis and fund flows all moved higher
As activity picked up, spot and perpetual futures trading volume across the crypto market rose 188%. CME Group Bitcoin futures volume increased 152%, while annualized basis climbed to 11.1%, the highest level since January 2025.
Bitcoin ETFs and related exchange-traded products posted net inflows of 31,740 BTC over one week, setting the highest reading since October 2025.
Short liquidations drove the early phase of the advance
K33 head of research Vetle Lunde said the initial stage of the rally was driven mainly by forced buying.
On Aug. 19, Bitcoin short liquidations reached $1.37 billion, a record high and close to twice the July 2021 level. Another $739 million in short positions was liquidated on Aug. 21.
The squeeze pushed perpetual futures open interest down to 284,000 BTC, the lowest level since May, while funding rates returned to neutral.
According to the analysts, large short squeezes have historically tended to appear near Bitcoin cycle bottoms. When short positioning becomes overcrowded and selling pressure is close to exhausted, trend reversals become easier to trigger.
Bessent’s bond-market push seen as a macro catalyst
On the macro side, Bessent’s push to expand buybacks of long-dated U.S. Treasuries was described by analysts as an important sign of improving liquidity expectations.
Reports said the U.S. Treasury could use Treasury General Account balances approaching $1 trillion to support larger bond buybacks.
Bitwise says two Bitcoin investment cases gained support
Bitwise chief investment officer Matt Hougan said the policy shift tied to Bessent strengthened two core investment cases for Bitcoin.
- First, Bitcoin’s scarcity could benefit from a global trend toward lower long-term financing costs.
- Second, as a global asset that does not rely on any single national financial system, Bitcoin has distinct value when geopolitical uncertainty rises.
Analysts say confirmation is still needed
Even so, analysts cautioned that Bitcoin remains about 36% below its all-time high. Whether the market can confirm a fresh uptrend will depend on macro policy, capital inflows, and the ability to hold key technical levels.