by Coinstrooper Crypto Articles
Quick Take
  • The crypto market ripped higher on Thursday, August 20.
  • TOTAL, the total crypto market cap, stood near $2.34 trillion, up about 9.32% from yesterday’s low.
  • A US Treasury move dragged bond yields lower and revived risk appetite, and a wave of short liquidations did the rest.
  • The Treasury doubled its bond buyback operations to at least $4 billion each and raised them from two to four per quarter, a plan that starts September 9.

What Happened

1. Washington Just Pushed Bond Yields Down

Policy did the work here. The Treasury doubled its bond buyback operations to at least $4 billion each and raised them from two to four per quarter, a plan that starts September 9.

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Market Context

The crypto market ripped higher on Thursday, August 20. TOTAL, the total crypto market cap, stood near $2.34 trillion, up about 9.32% from yesterday’s low.

When the Treasury buys back its own bonds, it becomes a large buyer in that market and pushes bond prices up. Prices and yields move in opposite directions, so yields fall, and the 10-year dropped to 4.647% while the 30-year slid to 5.196%.

Leverage took over from there. Traders betting on lower prices got run over, with $2.74 billion of shorts wiped out in 24 hours against just $257 million of longs, and 171,711 accounts liquidated.

Barrier: $2.38 trillion caps the move for now

Ethereum (ETH) led the majors near $2,250 after an 18% jump. It had climbed inside a rising channel since June 26, and this candle broke above the upper trendline on a jump in volume.

Why It Matters

Washington set it off. A US Treasury move dragged bond yields lower and revived risk appetite, and a wave of short liquidations did the rest.

Those same yields sat at their highest since 2007 a day earlier, pulling money out of crypto. Safe debt now pays less, so the bar a risky asset must clear drops and cash rotates back toward crypto.

Result: Cheaper money sends cash back into risk assets

Watch: Long positions now building as the inverse risk

Details

Spark: Treasury doubled bond buybacks to $4 billion each

Effect: The 10-year yield fell to 4.647%, easing pressure

2. A $2.74 Billion Short Squeeze Pours Fuel

Every forced short has to buy back to close, so that pressure flips into buying. Bitcoin traders lost $1.42 billion and Ethereum traders $1.13 billion, overwhelmingly on the short side. And this turned a policy bounce into a 9% surge.

TOTAL cleared $2.28 trillion before stalling just shy of $2.38 trillion.

A close above $2.38 trillion opens $2.55 trillion, while rejection puts $2.33 trillion and then $2.28 trillion back in focus.

Damage: $2.74 billion of shorts erased in a day

Coin Spotlight: Ethereum (ETH)

Sellers stopped it at $2,288. A daily close above that level opens $2,579, while failure drops it toward $2,187 and then the firmer $2,108 floor.

Breakout: ETH cleared the channel top held since June

Trigger: A close above $2,288 opens $2,579

Backstop: $2,187 then $2,108 catch any fade