Bitcoin climbs over 25% as short positions unwind and US Treasury actions boost liquidity

Bitcoin reached an intraday peak of about $79,500 on Friday, its highest level in months, before settling near $77,700, marking a gain of over 25% since the start of the week. The surge followed a period of six weeks in which the cryptocurrency traded between $62,000 and $66,000 after falling more than 50% from its October 2023 peak of roughly $126,000.

Traders who had built bearish positions throughout the year were forced to cover as the price moved higher, contributing to the rapid rally. Other digital assets, including Ether, also rose on the same momentum.

The move was reinforced by actions from the US Treasury, which doubled the size of its bond buyback program earlier in the week to stabilize the bond market. Treasury Secretary Scott Bessent said the program would be expanded further if yields continued to rise, creating easier financial conditions that tend to benefit risk-on assets such as Bitcoin.

Regulatory developments added to the optimism. The US Securities and Exchange Commission released a proposal titled “Regulation Crypto Assets,” which would lower registration requirements for crypto issuers. The following day, President Donald Trump hosted leaders from Coinbase, Ripple, Gemini and other firms at the White House, urging Congress to pass the Digital Asset Market CLARITY Act, legislation that would divide oversight of digital assets between the SEC and the Commodity Futures Trading Commission.

During the summit, Trump noted that the Commodity Futures Trading Commission was working to bring the decentralized derivatives exchange Hyperliquid onshore in a compliant manner. The comment prompted a 25% jump in Hyperliquid’s native token, HYPE, within 24 hours, pushing the token above $70.

Analysts view the combination of short-covering, Treasury liquidity measures and a more favorable regulatory outlook as key factors behind the recent Bitcoin rally.