Analysis: Bitcoin's 23% Weekly Surge Sparks Bull Market Resurgence Expectations, Short Squeeze and Bessent Policy Catalysts May Usher in a New Cycle

Odaily News Bitcoin has rebounded strongly recently. Analysts believe that record-breaking short squeeze activity, along with policy signals from U.S. Treasury Secretary Scott Bessent, may be pushing the market into a new phase of bull market cycle adjustment.

Data shows that Bitcoin has risen approximately 23% over the past week, marking its largest weekly gain since the post-U.S. election rally in November 2024. Crypto market trading activity has also recovered in tandem, with spot and perpetual contract trading volume surging 188%. CME Bitcoin futures volume rose 152%, and the annualized futures basis climbed to 11.1%—the highest level since January 2025. Additionally, Bitcoin ETF products recorded net inflows of approximately 31,740 BTC over the week, the strongest capital inflow since the market peak in October 2025.

Vetle Lunde, Head of Research at crypto research firm K33 Research, stated that the early phase of this rally was primarily driven by short covering. On August 19, Bitcoin short positions saw a single-day liquidation scale of $1.37 billion, a record high, followed by another $739 million in short liquidations on August 21. The massive short squeeze pushed open interest in perpetual contracts down to 284,000 BTC, the lowest level since May, while market funding rates also returned to neutral.

On the macro front, policy signals from U.S. Treasury Secretary Scott Bessent regarding increased long-term Treasury buybacks are also viewed by analysts as a market catalyst. K33 believes that the Treasury buyback program could lower long-term interest rates and boost demand for scarce assets. Meanwhile, Bitcoin's correlation with gold has risen, with the 90-day correlation coefficient reaching 0.52—the highest since October 2020—while its correlation with the Nasdaq index has declined to 0.38, a one-year low.

Matt Hougan, Chief Investment Officer at crypto investment firm Bitwise Asset Management, believes that Bessent's recent remarks on sanctions against Iran's financial network have further strengthened Bitcoin's investment thesis: as the global financial system becomes increasingly influenced by geopolitics, the value of assets that are decentralized and do not rely on any single nation's financial system may appreciate further. (The Block)