Bitcoin rose nearly 6% following the U.S. Treasury Department's announcement regarding the repurchase of bonds
Bitcoin rose nearly 6% on Wednesday and surpassed the $69,000 mark, a level the cryptocurrency had not reached since early June. The price surge came after the U.S. Treasury announced it would double its buyback of old long-term government bonds, according to Fortune.
Matt Mena, a senior strategist at crypto research firm 21Shares, said the market viewed this move as a form of quantitative easing. In his view, this could weaken the dollar and increase demand for assets that investors view as a hedge against inflation, particularly Bitcoin.
As the price rose, traders who had bet on a decline closed out their short positions by buying Bitcoin on the market. According to 21Shares, the volume of these positions totaled approximately $1.5 billion, with about $700 million of that occurring in a single minute. The company speculated that this could have been the largest short squeeze in Bitcoin’s history.
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The rally followed several months of weak performance for the cryptocurrency. According to CoinGecko, after the October crash—which triggered liquidations totaling over $19 billion—Bitcoin fell by approximately 40% from its $115,000 high.
Mena also pointed to investors’ expectations of a pause in U.S. interest rate hikes. In the first two weeks of August, U.S. spot Bitcoin ETFs attracted about $1 billion, which served as an additional source of demand for the cryptocurrency.
Following the U.S. Treasury’s statement, Ethereum and Zcash also rose in price—each of these tokens gained 9% over the past 24 hours. Grayscale’s Head of Research, Zach Pendle, believes that Bitcoin may have hit a low of $58,000 earlier this summer, and that the current situation could be attractive to investors with a long-term horizon.
