Cryptocurrency markets experienced a sharp rally on Thursday, with Bitcoin climbing above $71,000 and Ethereum jumping roughly 18% to surpass $2,250. XRP advanced about 10%, and the broader digital asset market added approximately $190 billion in value as buying spread across major tokens.
Treasury buybacks and policy signals provide the spark
The move was triggered by the U.S. Treasury's announcement that it would at least double liquidity-support buybacks across the 10- to 30-year part of the yield curve. This action helped pull the 30-year yield toward 5.18% and the 10-year toward 4.63%, reversing part of the recent bond rout. Lower yields reduce the relative appeal of cash and government debt, improving appetite for riskier assets like cryptocurrencies.
Washington also added a tailwind as President Donald Trump urged Congress to advance a "fair" version of the Digital Asset Market Clarity Act, appearing alongside executives from Coinbase, Gemini, and Ripple. The combination of easier financial conditions and pro-crypto policy signals restored risk appetite across the market.
Record short squeeze amplifies gains
The rally was magnified by one of the largest recorded short squeezes in crypto history. CoinGlass data showed nearly $3 billion of positions liquidated across more than 172,000 traders over 24 hours, with shorts accounting for about 92% of the total. Bitcoin alone saw over $1 billion of shorts closed within roughly an hour, while Ethereum generated about $1.13 billion in liquidations.
When leveraged short positions are forcibly closed, exchanges buy back the underlying asset, adding fuel and potentially triggering further liquidations. This dynamic turned the rally into a stampede, with Solana and other large-cap tokens posting double-digit gains and XRP pushing through $1.15.
ETF inflows signal institutional participation
Forced buying can produce explosive moves, but it eventually exhausts itself. Fresh capital becomes critical if the rally is to hold. U.S. spot Bitcoin ETFs attracted $517.19 million on Wednesday, their largest daily inflow since May 4, with BlackRock's IBIT accounting for $284.7 million. Analysts described the flows as renewed institutional positioning rather than pure retail FOMO, noting that longer-horizon allocations from significant capital providers are driving the demand.
The technical picture has improved. Bitcoin's hold above $70,000 is the immediate test, while Ethereum needs to defend the $2,200 region. XRP has pushed through $1.15, although its 200-day exponential moving average near $1.32 remains a more important trend hurdle. As Delta Exchange analyst Riya Sehgal noted, the next test is whether prices remain elevated once liquidation-driven momentum fades.
The Treasury move and Washington's policy signals provided the spark, while nearly $3 billion of liquidations turned the rally into a stampede. Strong ETF inflows suggest genuine capital is joining the move. If Bitcoin can hold above $70,000 after the short squeeze fades, Thursday's surge could look less like a relief rally and more like a broader shift in crypto's trend.
This article is for informational purposes only and does not constitute financial advice.
