Bitcoin climbs above $80,000 after $4bn short squeeze

August 25, 2026 (MLN): Bitcoin climbed above the $80,000 threshold on Tuesday, extending a strong rebound driven by renewed institutional inflows, improving risk sentiment, and continued momentum in the broader cryptocurrency market.

The world's largest cryptocurrency was last trading 2.5% higher at $80,785.

The latest advance follows a dramatic rally that began last week, during which bitcoin surged more than 20% in just three days, marking its strongest three-day performance since 2023.

The sharp move was partly fueled by a short squeeze that wiped out over $4bn in bearish cryptocurrency positions, according to CNBC.

Investor appetite for risk assets strengthened after the U.S. Treasury announced plans to double purchases of longer-dated government bonds.

The move temporarily pushed bond yields lower, while concerns surrounding inflation and rising government debt further increased interest in assets viewed as scarce, including bitcoin.

Institutional participation has also strengthened, with U.S. spot bitcoin exchange-traded funds recording net inflows of $1.92bn last week. The inflows marked their strongest weekly performance since October, when bitcoin reached its previous cycle high.

However, uncertainty remains over the sustainability of the latest breakout. Bitcoin has remained under pressure for much of the period since October, while BTIG noted that a similar rally in January 2023 initially lost momentum before the cryptocurrency eventually found support near its 200-day moving average.

Fundstrat, meanwhile, believes the latest rally could prove more sustainable than a short-lived rebound.

The research firm pointed to strong inflows into bitcoin and ether ETFs, higher trading activity, and growth in stablecoin issuance, which is often used to facilitate cryptocurrency purchases.

Other major cryptocurrencies also moved higher. Ether gained 1.17% to $2,498, while XRP rose 2.6% to $1.52 and has climbed around 50% over the past seven days, according to CoinGecko data.

Activity in the options market has also reflected growing confidence in the continuation of bitcoin's rally, with investors increasingly seeking exposure to potential gains further into the future rather than focusing solely on short-term price moves.

Fundstrat further noted that bitcoin's recent advance occurred without fresh purchases from Strategy, the world's largest corporate holder of bitcoin, which has not added to its holdings for two weeks.

A return of buying from the company, alongside sustained ETF inflows, could provide additional support to bitcoin prices.

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