Crypto Adds $280B in 24 Hours After $3.5B Liquidation Wipeout — 7th Largest in History
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Key Takeaways
The Kobeissi Letter estimates that $3.5 billion in leveraged crypto positions were liquidated within 24 hours, making it the seventh-largest liquidation event in crypto history.
Bitcoin’s initial rally was triggered by falling Treasury yields and a weaker dollar after the US Treasury unexpectedly doubled its planned long-dated bond buybacks, with a heavily short-positioned derivatives market accelerating the move.
The rally has evidence of real demand behind it: US spot Bitcoin ETFs attracted $517.2 million on Aug. 19, their strongest daily inflow in more than three months.
Crypto markets have added an estimated $280 billion in value in 24 hours after one of the largest leveraged position wipesouts on record turned a Bitcoin rebound into a full-scale short squeeze.
The Kobeissi Letter said approximately $3.5 billion in leveraged positions were liquidated over the 24-hour period, which ranks as crypto’s seventh-largest liquidation event. It is estimated that the industry’s total market capitalization simultaneously increased by $280 billion, equivalent to roughly $12 billion per hour.
Crypto markets officially post their 7th largest liquidation event in history. | Source: @KobeissiLetter
Other liquidation trackers have produced slightly different totals and historical rankings because exchanges, reporting windows, and coverage vary. CoinGlass data puts Bitcoin short liquidations alone at roughly $2.75 billion during the initial squeeze.
$BTC has erased 3 months of underperformance against the S&P 500 in the last 72 hours. | Source: @glassnode
Bitcoin (BTC) climbed from around $64,000 to above $72,000, while Ether (ETH) recorded an even larger percentage move. By Friday morning, BTC had extended the recovery beyond $76,000.
On Aug. 19, the Treasury unexpectedly announced that it would double the size of liquidity-support buybacks for 10- to 30-year Treasury securities, increasing purchases from $2 billion to at least $4 billion per operation between Sept. 9 and Nov. 4.
The move followed a bond selloff that had pushed the 30-year Treasury yield close to 5.34%, its highest level since 2007.
Long-term yields subsequently dropped by as much as 10 basis points, and the dollar weakened by around 0.7%. Stocks, gold, and Bitcoin all moved higher. The Dow Jones Industrial Average extended its decline to more than 500 points as US Treasury yields continued to climb, despite the Treasury’s efforts to ease pressure in the bond market through expanded buybacks.
The Treasury yield curve has completely transformed over the last year.
Just one year ago, it was deeply inverted: short-term yields were around 4.5%, while the 3-year yielded roughly 3.7%.
Today, short-term yields are below 4%, but 20- and 30-year yields exceed 5.2%. pic.twitter.com/hrZYVqO4gA
Lower bond yields can help crypto because returns on relatively safer government debt decline, while a weaker dollar can increase demand for alternative assets.
But the Treasury announcement alone does not explain the speed of Bitcoin’s move.
$3.5B Liquidation Cascade Turns Rally Into Short Squeeze
Crypto derivatives markets were heavily positioned for lower prices.
As Bitcoin began to rise, leveraged traders holding short positions were liquidated. Exchanges then automatically closed those trades.
Closing a Bitcoin short generally requires buying Bitcoin back. When thousands of positions are forced to close simultaneously, it creates additional demand, pushing prices higher and liquidating another layer of shorts.
That feedback loop helped Bitcoin accelerate from around $65,000 toward $70,000 in hours.
MarketWatch reported that more than $1 billion of short positions were liquidated in roughly one hour during the sharpest part of the move.
The $280 billion market-cap increase should not be read as $280 billion of new money entering crypto. Market capitalization is calculated by multiplying each asset’s circulating supply by its latest traded price, so relatively small amounts of buying can produce much larger changes in headline market value.
ETF Buyers Were Buying Too
There are, however, signs that the rally was not purely leverage-driven.
US spot Bitcoin ETFs recorded $517.2 million in net inflows on Aug. 19, their strongest session in more than three months. BlackRock’s IBIT accounted for $284.7 million, while ARKB brought in $77.7 million and Fidelity’s FBTC added $62.4 million.
Roughly $1 billion flowed into Bitcoin ETFs between Aug. 17 and 19, providing evidence of spot-linked demand alongside the derivatives squeeze.
Regulatory developments added another layer.
President Donald Trump used an Aug. 19 White House meeting with crypto executives to urge Congress to pass the CLARITY Act, while the SEC has separately proposed a framework offering new pathways and exemptions for crypto fundraising.
What Happens After the Shorts Are Gone?
The next phase is harder.
Forced short covering is temporary. Once those positions are liquidated, the automatic buying that helped propel Bitcoin higher disappears.
Analyst David argues that Bitcoin is trading at a substantial discount to its longer-term trend rather than needing another speculative bubble to move higher.
With BTC around $73,000 on Aug. 20, he estimates a power law trend value near $138,000, implying a discount of roughly 47%. His model puts Bitcoin at 95,000–115,000 by the end of 2026 and 125,000–155,000 over the next year, with the core thesis being that even a partial mean reversion toward the trend could drive significant upside.
Macro conditions are not settled either. Treasury yields rebounded after their initial drop, with the 10-year returning to around 4.69%, showing that the Treasury intervention has not eliminated concerns over inflation, deficits and government borrowing.
The next major macro test comes at Jackson Hole, where Federal Reserve Chair Kevin Warsh is expected to provide further clues on monetary policy amid disagreement over whether US rates need to rise again.
The liquidation cascade explains why Bitcoin moved so quickly. Whether the move lasts now depends on something less mechanical: ETF flows, spot buyers, and whether Bitcoin can keep attracting demand after the short sellers have already been forced out.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Dr. Guneet Kaur is a senior editor at CCN.com and a Science Fellow at Exponential Science. She is a fintech and blockchain expert with extensive experience in digital finance education, blockchain ecosystems, and cryptocurrency markets. She has worked with global media such as Cointelegraph, as well as education and blockchain platforms, to design and lead strategic content and learning initiatives. As an educator and assessor for top-tier executive programs, she bridges real-world fintech trends with academic insight.
Dr. Kaur is also a published researcher and peer reviewer across fintech and data science journals, including Financial Innovation Journal and International Journal of Big Data Intelligence and Applications. Her work spans data-driven analysis, Web3 innovation, and technical content development. With a strong foundation in both industry and academia, she translates complex financial technologies into practical applications, empowering learners, professionals, and institutions across the rapidly evolving digital finance landscape.
