BTC surged about 23% last week, briefly touching $79,500 before falling back to around $77,000. One of the hotly debated questions in the market now is whether this move signifies the return of a bull market—or if it is only the largest short-squeeze in history.

First, look at the signals that support the return of a bull market.

On the macro level, the U.S. Treasury announced that it would expand the size of its long-term Treasury buyback at least by a factor of two, the U.S. dollar index weakened, and the market reignited the narrative of a “currency-devaluation trade.” Some institutions noted that the current rebound is essentially an interest-rate trade rather than a crypto trade; it features both expectations of accommodative policy and concerns about debt sustainability. Historically, this combination has been favorable for BTC. In addition, there have been breakthroughs on the regulatory front as well: Trump met with executives from the crypto industry at the White House, and the SEC proposed new rules for crypto assets. Some have defined this as a window for a systemic turning point driven by a triple resonance—an interest-rate inflection point, regulatory tailwinds, and improvements in capital structure.

There are also positive changes in liquidity. In the first 20 days of August, BTC spot ETF net inflows exceeded $2 billion, making it the strongest month of the year. This week, combined net inflows into BTC and ETH spot ETFs totaled $2.6 billion, the highest since October last year. On-chain data shows that over the past 60 days, large holders increased their holdings by about 43,000 BTC. Institutions actually added 7.5% when BTC fell 14% this year in the second quarter.

Next, let’s look at the risks keeping a return to a bull market at bay.

First, short squeezes are the direct trigger behind this surge. On August 20 alone, about $1.44 billion in short positions were forcibly liquidated. The upward move then set off a chain of liquidations, amplifying the rally through passive buying. Such a rise driven by short-covering panic naturally raises doubts about its sustainability.

Next, it’s the rate-hike and rate-cut cycle. The Federal Reserve’s July meeting minutes showed internal divisions were larger than what the surface decision suggests. Some officials believe that if inflation can’t fall further, additional tightening is needed. CME data shows the probability of a rate hike in September is still above 30%. Once expectations of rate hikes are rekindled, high-volatility BTC may face repricing.

Next is the issue of geopolitical conflict. The 60-day negotiation window between the U.S. and Iran expired on August 17 without any substantial progress. Iran’s Supreme National Security Council warned that if the economic war continues, it will block oil transport through the Strait of Hormuz. Meanwhile, North Korea strongly condemned Japan’s record-high defense budget, and the ongoing geopolitical instability continues to suppress risk appetite.

Finally, the crypto bill remains undecided. The CLARITY bill was strongly promoted by Trump, but after the Senate reconvenes in September, it would still need 60 votes to pass, making the uncertainty extremely high. However, the SEC and CFTC are already advancing their respective rulemaking, and the institutionalization process may not necessarily depend entirely on the bill.

Glassnode noted that BTC is still in the capitulation stage of a bear market. The Treasury’s buybacks have not resolved the fundamental issues of debt and inflation. After shorts cover, they still face tests of new capital and policy.

In short, this rebound has mainly been driven by short squeezes and expectations of currency devaluation. But the key factors suppressing BTC’s fundamentals—such as the shadow of rate hikes, geopolitical conflicts, and regulatory uncertainty—have not disappeared. Whether BTC can hold above $80,000 and kick off a true bull market depends on whether these hidden risks can be resolved one by one, not on one short squeeze that supposedly provides a once-and-for-all solution.