Bitcoin heads for best weekly gain in three years as crypto rally gathers pace

Bitcoin is on track for its strongest weekly gain in more than three years, with the world’s largest cryptocurrency rallying around 23% this week as lower Treasury yields, renewed institutional demand and a wave of short covering fuelled a broad-based crypto recovery.Bitcoin was last trading at around $77,000, compared with roughly $62,800 at the start of the week. Crypto-linked stocks also surged, with Coinbase and Circle gaining more than 9% each at one point, while Strategy advanced 7%.The rally gathered pace on Wednesday after US Treasury Secretary Scott Bessent announced plans to at least double the size of the Treasury’s long-dated bond buybacks. The move pushed longer-term Treasury yields lower, easing pressure on risk assets and helping revive demand for cryptocurrencies.Max Stuedlein, head of partnerships at Sygnum APAC, told CNBC that Bitcoin’s move reflected an alignment of macroeconomic and policy catalysts. He said the Treasury’s decision to increase buybacks of long-dated government debt was aimed at addressing concerns around long-term borrowing costs, rising US debt levels and the potential crowding-out effect of debt issuance by hyperscalers.The macro boost was followed by a powerful short squeeze, forcing traders who had bet against cryptocurrencies to close their positions. CoinGlass data showed that roughly $2.7 billion in crypto short positions were liquidated as the rally accelerated.Rachael Lucas, an analyst at BTC Markets, told Bloomberg that the key driver was the Treasury’s decision to double its long-dated bond buybacks, which pulled long-term yields lower and lifted risk appetite more broadly. She cautioned that while nothing had changed Bitcoin’s long-term investment case, its volatility remained intact.The squeeze has continued to play a major role in the rally. Adam Morgan McCarthy, lead researcher at London-based digital-asset liquidity and market data firm LO:TECH, said nearly $2.5 billion in leveraged bearish bets on Bitcoin and $4.5 billion across all crypto assets had been liquidated over the past three days, citing CoinGlass data.Bitcoin’s rise has also coincided with a return of institutional money. US-listed spot Bitcoin exchange-traded funds are on track for their largest weekly inflows since January, with the 13 ETFs attracting more than $1 billion so far this week.The improving sentiment has prompted some analysts to reassess their forecasts. Geoffrey Kendrick, global head of digital-assets research at Standard Chartered, wrote in a note to clients that there was now a risk his $100,000 year-end forecast for Bitcoin could prove too low.Policy developments have added another layer of optimism. US President Donald Trump met crypto industry executives this week, including representatives from Coinbase Global and Payward, and urged the Senate to pass the Clarity Act, a crypto market-structure bill that has stalled over disagreements surrounding its ethics provisions.The bill failed to come to a vote before the Senate’s August recess, but the meeting was nevertheless viewed as a positive signal for the industry.Lucas told Bloomberg that the Trump crypto meeting, momentum around the Clarity Act and positive ETF inflows had added to sentiment, although they were not the whole story behind the rally.Crypto-focused equities have tracked Bitcoin higher. Coinbase, the biggest US digital trading platform, rose 6.3%, while Bitcoin accumulator Strategy gained 4.5% and stablecoin issuer Circle Internet Group climbed almost 7%.Large Bitcoin holders also appear to be returning to the market. According to CryptoQuant data, so-called Bitcoin whales have accumulated roughly $2.75 billion worth of the cryptocurrency over the past 60 days.Not everyone sees the rally as a clean signal of a fundamental shift. McCarthy said gold was providing a clearer indication of where investors were hedging against currency and inflation risks, arguing that Bitcoin’s gains had been boosted by forced buying from the short squeeze.The cryptocurrency remains well below its record high of more than $126,000, reached last October, before a sharp sell-off pushed it as low as $58,642 by the end of June.For now, Bitcoin’s sharp rebound has put the cryptocurrency back at the centre of the risk-on trade. But with leverage playing a major role in the latest move, investors will be watching closely to see whether the rally can hold once the forced buying fades.