July ended with crypto drifting. August ended with almost every major asset up double digits, and the whole reversal traces back to a single Wednesday afternoon.

On August 19, the U.S. Treasury announced it would at least double its long-dated bond buybacks, from $2 billion to $4 billion per operation, effective September 9. The 30-year yield had touched 5.337% the session before, its highest since 2007, and federal debt had just crossed $40 trillion. The buyback expansion read as a liquidity backstop, yields fell, the dollar weakened, and a crypto market positioned almost entirely for further downside was caught facing the wrong way.

What followed was the largest short-side liquidation on record going back to 2021: roughly $2.7 billion of bearish positions wiped out in 24 hours, about 92% of them shorts. Bitcoin cleared $70,000, then $75,000, closed as