Is the “cow” of the crypto market coming? Bitcoin suddenly surged more than 8%, and the collapse of over $1 billion in an hour created the biggest wave of short liquidations in history

The Zhitong Finance App learned that Bitcoin suddenly rebounded strongly on Wednesday. At one point, it surged more than 8%. The price reached a high of 6,9970.36 US dollars. It is only one step away from 70,000 US dollars, the highest level since the beginning of June, and also recorded the biggest one-day increase since March. With the rapid reversal of the market, a large number of bears were forced to close their positions, and the market experienced the largest wave of Bitcoin short liquidations since relevant records were recorded in 2021.

According to Coinglass data, in just about an hour, more than $1 billion of Bitcoin short positions were forcibly closed. Previously, Bitcoin experienced a continuous decline for several months. At one point, it fell to around 60,000 US dollars, and bearish sentiment continued to accumulate in the market. As the price suddenly turned upward, a large number of passive purchases generated by short compensation further pushed up the currency price, creating a typical “emptying” market.

There are multiple favorable factors behind this rebound. US President Trump met with a number of cryptocurrency industry executives at the White House on the same day, including representatives of companies such as Coinbase (COIN.US), Payward, and Blockchain.com Group Holdings, to further strengthen market expectations for the Trump administration to promote a digital asset-friendly regulatory environment.

Meanwhile, the US Securities and Exchange Commission (SEC) proposed a new plan this week to allow some digital asset issuances to be exempt from filing securities registration statements. According to the SEC, such exemptions are mainly aimed at enterprises in the start-up and financing stages, and are aimed at lowering the financing threshold for related companies. Previously, the advance of legislation on the structure of the cryptocurrency market in the US Congress came to a standstill.

Axel Rudolph, chief technical analyst at IG, said that Bitcoin's approach to $70,000 was mainly driven by bears' recovery, indicating that buyer confidence is recovering. However, this round of growth will now face an important test, namely whether it can maintain the current momentum and further challenge the area around $75,000.

Joshua Lim, co-head of the FalconX market, pointed out that in the past few weeks, the cryptocurrency exchange market was almost shrouded in sell-outs and negative news, but Bitcoin was quite strong in the early $60,000 area, which ultimately drove a shift in market sentiment and trading logic.

There have also been significant improvements on the technical side. Wednesday's rise pushed Bitcoin back above the 100-day and 200-day moving averages, both of which are important technical indicators that traders are closely watching. The rebound also spread to the entire cryptocurrency market. At one point, Ethereum rose 12% intraday, and also recorded the biggest one-day gain since March.

The previous position distribution in the options market also reflects investors' bets on key price ranges. According to data from cryptocurrency trading platform Deribit, Bitcoin options investors previously allocated a large amount of downside protection around $60,000, while placing upward positions around $70,000. Unclosed contracts related to bearish and bullish options were highly concentrated around these two execution prices.

In addition to the benefits at the regulatory level, the US Treasury unexpectedly expanded the scale of long-term treasury bond repurchases on Wednesday, which also became an important catalyst for Bitcoin's rise. US Treasury Secretary Bessent tried to ease the pressure of continuing to rise in long-term financing costs, and the Treasury Department announced that it would at least double the liquidity support repurchase scale of 10-30 year treasury bonds.

After the news was announced, US long-term treasury yields and the US dollar both declined, creating a more favorable market environment for risky assets such as Bitcoin. Adam McCarthy, head of research at cryptocurrency liquidity and market data company LO:Tech, said that shorting Bitcoin in the past few weeks has become a concentrated transaction in the market, and the policy signals released by the US Treasury Department on the same day have clearly boosted investor confidence and triggered a rapid return of capital to risky assets such as Bitcoin.

Bitcoin's sharp rise has also led to the collective strengthening of cryptocurrency concept stocks. Coinbase (COIN.US), one of the largest digital asset trading platforms in the US, rose more than 9%, while Strategy (MSTR.US), a major Bitcoin holder, rose more than 12%, while stablecoin issuer Circle (CRCL.US) surged nearly 10%.

However, there is still uncertainty about US cryptocurrency regulatory legislation. The “Clarity Act”, which aims to establish a regulatory framework for the digital asset market structure, is currently at a standstill in the US Senate. The Democratic Party and the Republican Party have clear differences over provisions such as the Code of Ethics. Some of the disputes are related to Trump's own participation in the digital asset industry.

For Bitcoin, the next key point is whether this rapid rise, driven by short compensation, can be further transformed into real continuous buying. This round of shorting shows that previously, bearish positions in the market were already highly concentrated. Once the price reverses, a large number of forced liquidations may form a self-reinforcing upward trend. As Bitcoin approaches the $70,000 mark again, the focus of the market will shift to whether buying can continue and further challenge the key area around $75,000.