Bitcoin Returns Above $80,000 as Short Squeeze Wipes Out $445 Million in Bets

Bitcoin climbed back above $80,000 on Friday, gaining about 6% in a day after a week that opened with the Clarity Act failure and a Fed rate hike. The move flushed out nearly half a billion dollars of short bets, and market-wide liquidations topped $445 million, according to Decrypt. Traders who had positioned for more downside after the Senate vote lost the most, while holders of bitcoin and altcoins came out ahead.

Where the Momentum Came From

It was a week of bad headlines for crypto. On Tuesday the US Senate failed to gather the 60 votes needed to advance the Clarity Act, with only 49 senators in favor, and bitcoin briefly slipped below $74,887. The drop was shallow because, in CoinDesk's assessment, traders had already priced in much of the risk of the bill failing. On Wednesday the Federal Reserve raised rates by 25 basis points for the first time since 2023. The Bank of Japan raised its own rate too, to a 31-year high.

So why did the market climb instead of fall? Outlets explain it differently. Decrypt ties the rally to the Fed's projections, where the median rate at the end of 2027 sits at 4.1%, meaning only one more hike is ahead. Cointelegraph points to oil and bonds. WTI crude hovered near $98 a barrel, and the 30-year US Treasury yield reached 5.34% after the International Energy Agency warned that constrained supply from the Persian Gulf could force countries to cut consumption. At the same time, futures, according to CoinDesk, price in three more quarter-point hikes by April 2027, so the case for a soft Fed remains unproven.

How the Short Squeeze Played Out

A short is a bet on a falling price, opened with collateral. When the price rises, the collateral shrinks, the exchange force-closes the position and buys the asset back, and that buying pushes the price higher still. A short seller's potential losses are theoretically unlimited, since a price can rise without a ceiling. Friday morning looked exactly like that. According to CoinGlass data cited by Cointelegraph, about $250 million of shorts were liquidated in just four hours. By the end of the day, Decrypt counted more than $445 million across the market, over $230 million of it in bitcoin.

Bitcoin opened the day near $76,355, reached $80,846 within hours, and touched $81,034 on Bitstamp. TradingView data shows the price filling pockets of liquidity above spot, which put a cluster of shorts above it under fire. A move like this runs on forced buying, so the main question is whether real demand shows up afterward.

What Funds and Altcoins Did

Money was flowing into funds even before Friday's jump. On Thursday US spot bitcoin ETFs took in about $159 million, while ether funds lost roughly $39 million for a third session in a row, according to SoSoValue. Over 30 days, bitcoin funds have gathered almost $2.5 billion. Corporate treasuries are more cautious. CoinDesk calculated that they bought only 5,900 BTC in three months.

Mitchell Askew, head of Blockware Intelligence, explained the price resilience as seller exhaustion.

"Anybody who was going to sell bitcoin based on events like these has already sold. They no longer have coins to sell."

- Mitchell Askew, head of Blockware Intelligence, comment by email to CoinDesk

Sygnum Bank reminded that rising yields do not always hurt bitcoin. If fear of currency debasement drives them, gold and bitcoin rise together with rates.

The regulatory backdrop improved as well. On Thursday the SEC published its innovation exemption, which lets platforms with tokenized securities trade stocks onchain under set conditions. LMAX Group argues that the failed bill delays a statute but does not stop the SEC and CFTC from acting under existing powers.

Altcoins moved faster than bitcoin. The HYPE token set a record above $90 after Hyperliquid launched manual borrowing, XRP gained 6.9% and moved toward a "golden cross", and layer-2 and DeFi tokens led the broad advance, according to CoinDesk. On Thursday Zcash was the strongest of the majors, adding 10% to $1,488, and the only US fund tracking it drew almost $47 million in a day and more than $230 million in a month. Solana gained about 5% and BNB nearly 4%.

Levels and Risks After the Rebound

September is historically weak, averaging a loss of about 3% since 2013. According to CoinDesk, before Friday's rally bitcoin was down only 1.5% for the month and about 32% above the start of the quarter, so the market got through September better than expected after August's 25% gain.

The technical picture looks solid but leaves little room. Glassnode data shows bitcoin back above the True Market Mean, the average cost basis of all coins bought on the secondary market, at $76,660. The cost basis of corporate treasuries sits at $80,500, so the price is now almost at their break-even level. Trader Rekt Capital says bitcoin faces a "moment of truth" near $82,000, and a failed breakout would form a double rejection from the level where the previous rebound ended in May. Decrypt puts resistance at $82,281 and first support at $75,569.

Indicators confirm the strength of the move. According to Decrypt, the ADX trend gauge stands at 40.6, above the 25 threshold traders treat as a sign of a real trend, and the RSI at 63.3 has not yet reached overheated territory. Bitcoin formed a golden cross on the chart last Saturday, and the gap between the averages is slowly widening. Still, it remains almost 20% below its previous all-time high.

Several factors could limit the rebound.

• Oil near $98 a barrel and the IEA warning could push bond yields higher again.
• Futures price in three Fed rate hikes by April 2027.
• The Squeeze Momentum indicator has stayed on for 11 bars in a row, and Decrypt does not rule out a "Bart Simpson" pattern, where a sharp green candle and a squeeze are followed by an equally large red one that cancels the gain.
• Corporate treasuries are buying little, so the market has no steady large buyer.

What Is Left After Friday

On Friday bitcoin returned to the $80,000-$82,000 range, and this is where it will be decided whether the rebound becomes a trend. Anyone planning to sell Bitcoin for hryvnia should remember that on liquidation days the exchanger rate changes within minutes. The trend is on the buyers' side for now, but it rests on short covering rather than new demand.