Bitcoin has suddenly transformed the crypto market's mood. On Friday, BTC climbed above $77,000 and reached about $79,400 before pulling back, putting the cryptocurrency on track for a roughly 21% weekly gain. MarketWatch reports this would be Bitcoin's strongest weekly performance since March 2024, while the move has lifted BTC nearly 30% from its recent low near $60,000.

The rally has also reached Ethereum and Solana. ETH moved above $2,300 and gained roughly 24.5% over seven days, while Solana rose more than 17% across the same period. HYPE also remained one of the stronger large-cap performers, showing that the move is no longer limited to Bitcoin alone.

But there is one important detail behind the rally: short liquidations. More than $4 billion in bearish crypto positions were liquidated across two days, including roughly $1.2 billion during the latest 24-hour period. Thursday alone recorded about $3 billion in liquidations, the largest single-day figure in CoinGlass records going back to 2021. Forced buying from short sellers helped accelerate the move.

That distinction matters. A rally driven mainly by forced short covering has a different foundation from one driven by fresh spot demand. Right now, the market is showing evidence of both. U.S. spot Bitcoin ETFs recorded $606.3 million in net inflows on August 20, their strongest session since May 1. Ethereum ETFs added another $219.5 million, bringing combined Bitcoin and Ethereum ETF inflows to about $825.8 million for the session.

Macro conditions are also playing a major role. The U.S. Treasury recently doubled planned long-duration bond buybacks from $2 billion to $4 billion per operation, a move linked by market analysts to easier liquidity conditions and lower long-term rate pressure. Bitcoin has historically shown strong sensitivity to liquidity expectations and real yields, so the Treasury story has become an important part of the current rally.

Washington is adding another layer. President Donald Trump has urged Congress to advance the Digital Asset Market Clarity Act, giving traders another regulatory catalyst to monitor. The combination of stronger ETF flows, improving liquidity expectations and regulatory momentum has created a much stronger backdrop than the market had earlier this month.

Now the market faces the $80,000 question.

CoinDesk identifies $80,000 as the immediate resistance area for Bitcoin. A decisive move through that level would give traders another important confirmation point, while rejection near $80,000 would show that the rally still lacks enough conviction to move into a new range. The timing also matters because Friday's move enters a weekend period when ETF trading pauses and liquidity typically becomes thinner.

Ethereum is another asset worth watching closely. The ETH/BTC ratio has moved above its 50-week exponential moving average and is testing resistance around 0.03. A sustained move above that level would signal stronger relative performance from Ethereum and provide another indication of whether the current rally is broadening beyond Bitcoin.

Pro Tip

Don't judge a breakout from price alone. Compare price with ETF inflows, trading volume, liquidation data and relative strength across BTC, ETH and major altcoins. A move backed by several independent signals offers stronger confirmation than a fast spike powered mainly by liquidations.

The crypto market has therefore entered a new phase of the current cycle. Bitcoin is up sharply, ETF demand has returned, Ethereum is gaining ground, Solana is participating and more than $4 billion in short positions have already been wiped out. Yet the strongest test is still ahead.

If Bitcoin breaks $80,000 and holds above the level with continued ETF demand and healthy spot activity, traders will have a stronger case for treating the move as more than a short squeeze. If the price fails at resistance and ETF flows weaken, the latest rally might prove to be a liquidity-driven burst rather than the beginning of a lasting trend.

For now, the market has momentum.

The next question is whether the momentum has enough fuel to survive the weekend.

🔥 Narratives on the Radar

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Watch the flows. Watch the reaction. Do your own research.