The current strong surge in the digital currency market—which has driven Bitcoin to surpass the $78,000 level and deliver its strongest weekly performance in years—is the result of the combined effect of several direct economic, political, and technical factors: [1]
📊 1. U.S. Treasury decisions and the decline of the dollar
The U.S. Department of the Treasury announced the doubling of long-term government debt repurchase operations (bonds). This move led to: [1, 2]
Lower U.S. Treasury bond yields.
Weaken the U.S. dollar and investors’ fear of a decline in its purchasing power.
Flight of liquidity toward "hedging trades" (Debasement Hedges), which ignited gold and Bitcoin prices alike, as both are considered safe havens against inflation of traditional currencies. [1, 2]
📉 2. Historic liquidation of short positions (Short Squeeze)
The sudden surge in prices caught speculators off guard—those betting on a market decline (short positions): [1]
The rapid rise led to forced liquidation of short contracts valued between $2.7 and $3.8 billion within just two days.
To close these losing positions, traders were forced to buy digital currencies en masse and quickly, creating a “snowball effect” that intensified both the speed and severity of the rally. [1, 2, 3, 4]
🏛️ 3. Political and legislative support in Washington
Markets are positively affected by the legislative and regulatory push led by the U.S. administration (under Trump), which supports the crypto sector. Clear expected regulatory rules remove uncertainty, encouraging major financial institutions to inject “real,” large amounts of money into the market without fear of legal prosecution. [1, 2]
💰 4. Record inflows into spot funds (ETFs)
Spot Bitcoin exchange-traded funds (Bitcoin ETFs) saw heavy demand, with inflows exceeding half a billion dollars (reaching one billion dollars per week), the highest rate of inflow since the start of the year. This reflects a strong return of confidence from both retail and institutional investors. [1, 2]
🔍 Summary of the current market move:
The current wave is driven not only by random speculation, but also by a mix of declining confidence in bonds and the U.S. dollar—accompanied by a technical explosion in the derivatives market (short liquidation), plus political cover and massive institutional inflows. This momentum even spread to alternative markets such as Ethereum, Solana, and XRP. [1, 2, 3, 4, 5]$
