Bitcoin Surges Nearly 25% to $78,500: Here’s Why

Bitcoin has jumped nearly 25% in just a few days, climbing from around $64,000 to as high as $78,500, with an unexpected change in the US Treasury’s bond-buyback program helping trigger the rally.

The Treasury said it would double the size of buybacks for some long-term government bonds to at least $4 billion per operation. In simple terms, the government is buying more of its older debt back from investors to improve liquidity in the bond market. This initially pushed long-term Treasury yields lower and weakened the dollar, conditions that tend to be supportive for risk assets such as Bitcoin.

The move then helped set off a much bigger reaction in crypto. Traders who had been betting on Bitcoin falling were forced to close those positions by buying Bitcoin back, creating a short squeeze that accelerated the rally. More than $4.3 billion in crypto short positions have been liquidated since Wednesday.

Institutional demand also returned. US spot Bitcoin ETFs attracted $606.3 million on Thursday alone, taking weekly inflows to about $1.61 billion.

Importantly, Treasury buybacks are not the same as quantitative easing. The program is designed to improve the functioning of the government bond market rather than directly inject new money into the economy. Still, traders interpreted the expansion as a positive liquidity signal at a time when high long-term yields had been putting pressure on markets.

Investor takeaway: Bitcoin’s rally has been powered by a combination of easier financial conditions, ETF buying and a powerful short squeeze. The move above $78,000 shows momentum has changed quickly, but after a nearly 25% surge in only days, volatility is likely to remain high.

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