A record $4 billion in shorts was wiped out — why forced buying is not the same as demand

Bitcoin climbed above $77,000 on Friday and at one point traded near $80,000, capping its strongest week since 2023, after more than $4 billion in bearish bets were closed by force over two days. Roughly $3 billion of those short positions were wiped out on Thursday alone, the largest single-day figure in CoinGlass records going back to 2021. A large part of the move came from traders being made to buy, not from anyone deciding bitcoin was worth more.

A liquidation happens when a trader borrows to take a position bigger than their own money would cover, the market moves against them, and the exchange closes the trade automatically before the loss exceeds what they put down. Traders betting on a fall have to buy back in order to close, so every forced closure nudges the price up, which pushes the next trader over the line. In the latest 24 hours about $1.2 billion of the $1.4 billion in total liquidations were shorts, spread across 156,211 traders, and the biggest single position closed was a $25.13 million bitcoin trade on Hyperliquid.

The spark came from outside crypto. On Wednesday the US Treasury doubled its long-end bond buybacks from $2 billion to $4 billion per operation, easing conditions across the roughly $30 trillion Treasury market and pulling long-term yields down, which tends to lift appetite for riskier assets. The same day, President Donald Trump urged Congress to advance the Digital Asset Market Clarity Act at a White House event attended by executives from Coinbase, Gemini, Ripple and Chainlink Labs. SoSoValue data shows spot bitcoin exchange-traded funds took in more than $1 billion from Wednesday onward.

Analysts watching the move separate the two engines. Nicolai Sondergaard of Nansen said short covering amplified the rally rather than created it, with ETF and spot buying doing real work underneath. Joao Alfredo Wedson of Alphractal was more skeptical, noting that sharp short squeezes are common in bear markets and can make a brief rebound look like the start of a new uptrend; he described the move as a relief rally. Bitcoin's market value now stands around $1.5 trillion, still about 40% below the record above $126,000 set last October.

For a beginner, the useful part of a liquidation figure is what it measures: how much borrowed money was sitting on one side of the market, not where the price goes next. A squeeze also burns its own fuel, because once the bearish positions are cleared out, further gains depend on people buying at higher prices. Funding rates have turned positive and leveraged traders are now crowded on the long side, which is the same machinery pointing the other way. This is information, not advice, but the structural point is simple: forced closures happen to leveraged positions, and coins you hold outright are not closed out by an exchange.