Bitcoin climbed above $77,000 on Friday, extending a rapid recovery that has lifted its price by more than 20% over the past week.
The cryptocurrency gained over 9% in 24 hours, according to HODLFM market data, after trading near $64,100 just two days earlier. Bitcoin is now at its highest level in months, helped by improving market sentiment, renewed demand for spot exchange-traded funds and a sharp squeeze on traders betting against it.
The rebound marks a sudden change in direction. Bitcoin was trading near $63,500 as recently as Aug. 18, when VanEck analysts pointed to low realized volatility and signs that some long-term holders were beginning to capitulate.
Short sellers caught out by Bitcoin’s surge
Bitcoin’s rally has caused heavy losses across the derivatives market.
CoinGlass data showed that 153,352 traders were liquidated over 24 hours, with total crypto liquidations reaching $1.25 billion. The largest single order was a BTC-USD position worth $23.59 million on Hyperliquid.
Most of the losses came from bearish positions. These traders had expected prices to fall, but were forced to close their positions as Bitcoin continued to climb.
This process can add momentum to a rally. When exchanges automatically close leveraged short positions, traders are forced to buy back the asset. That creates additional demand and can push the price even higher.
More than $4 billion in bearish crypto positions were liquidated over two days.
Those numbers help explain the speed of Bitcoin’s rise, but they also leave the market with an important question. Is the rally being supported by new buyers, or is much of it the result of short sellers being forced out?
ETF inflows point to fresh demand
Demand for U.S. spot Bitcoin ETFs offers another encouraging signal.
The funds recorded $606.29 million in daily net inflows as of Aug. 20, according to SoSoValue. That brought their cumulative net inflows to $53.40 billion.
ETF data matter because they provide a clearer view of investor demand outside the leveraged derivatives market. Short liquidations can drive prices higher for a limited period, but consistent ETF inflows suggest that investors are putting fresh money into Bitcoin.
Institutional interest had already begun to recover earlier in August. U.S. spot Bitcoin ETFs attracted hundreds of millions of dollars during the initial rebound, with BlackRock’s IBIT responsible for a large share of the inflows.
The picture has not been entirely consistent, however. ETF flows have moved in both directions during August, so traders will be watching whether the latest inflows continue as Bitcoin attempts to hold its gains.
A weaker dollar supports the rally
Bitcoin is also benefiting from a more favorable macroeconomic environment.
The U.S. dollar weakened on Friday and was heading for a weekly decline, while Bitcoin gained more than 19% over the same period. A softer dollar can support assets such as Bitcoin and gold by making them more attractive to investors seeking alternatives.
Reuters reported that markets were reassessing the outlook for U.S. fiscal policy after Treasury Secretary Scott Bessent announced plans to double government buybacks of long-term Treasury bonds.
The announcement helped bring down longer-term borrowing costs and raised expectations of improved market liquidity. Both developments have provided a more supportive backdrop for risk assets.
Other financial outlets, including MarketWatch, have connected the crypto recovery to Treasury market developments, changing liquidity expectations and renewed optimism about U.S. digital-asset legislation.
President Donald Trump’s push for Congress to move forward with the CLARITY Act has added to the positive sentiment. The proposed legislation is intended to establish clearer rules for digital assets in the United States, potentially easing some of the regulatory uncertainty facing the industry.
Bitcoin faces a test near $79,000
The next key area for Bitcoin sits between $78,000 and $79,000.
Previous technical analysis identified this range as an important resistance zone. If Bitcoin moves through it and holds, traders may begin looking toward $84,000 as the next potential target.
A rejection near $79,000 could produce a different outcome. Bitcoin has risen by more than 20% in roughly one week, making a pullback possible after such a fast advance.
The amount of short covering behind the move makes this level even more important. With billions of dollars in bearish positions already liquidated, Bitcoin may need continued spot buying to maintain its momentum.
Once the forced buying slows, ETF flows and broader investor demand will offer a better indication of the rally’s underlying strength.
Bitcoin also remains far below its previous record of more than $126,000. The latest move is therefore better viewed as a strong recovery from a deep correction rather than a return to record territory.
For now, several forces are working in Bitcoin’s favor. ETF inflows are improving, the dollar is weaker, liquidity expectations have become more supportive and short sellers have been caught on the wrong side of the market.
The next test is whether Bitcoin can stay above $77,000 once the liquidation wave begins to fade. If buyers continue to step in, the rally could develop into a broader recovery. If demand weakens, the move may prove to be another sharp but temporary rebound.
Dayo Paul
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