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Treasury's announcement that it would at least double its purchases of longer-term government bonds shifted financial conditions fast enough to catch a heavily shorted crypto market offside.
Against the backdrop of months of bearish positioning built up after the October 10, 2025 flash crash, the relief trade on August 19 turned into one of the largest forced short squeezes since that same event.
CoinGlass data show $2.73 billion in short positions were liquidated on the day, against only $248.10 million on the long side, for a total of $2.97 billion in wiped positions.
How the positioning got this lopsided The read-through for crypto was mechanical. Longer-duration Treasury buybacks loosen financial conditions by pulling yield lower and nudging risk appetite out the curve.
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