SKN | Bitcoin Surges Above $80,000 as Fed Signals Rate Pause and Shorts Face Heavy Liquidations

Key Points:

• Bitcoin reclaimed $80,000, trading near $80,270 and gaining almost 3% over 24 hours as softer Federal Reserve expectations improved risk appetite.
• More than $415 million in crypto short positions were liquidated over 24 hours, with more than 119,000 traders liquidated across the market.
• September rate-hike odds fell to 50.4% from 63.2% after Fed Governor Christopher Waller indicated he could support keeping rates unchanged if inflation continues improving.

Bitcoin surged back above the $80,000 threshold Thursday as a shift in Federal Reserve expectations triggered a broad rebound across cryptocurrencies and U.S. equities. The move was amplified by a sharp wave of short liquidations, showing how quickly leveraged positioning can accelerate a market recovery when monetary-policy expectations shift in favor of risk assets.

Waller’s Comments Shift September Rate Expectations

Federal Reserve Governor Christopher Waller said he would be “inclined to support” holding the benchmark interest rate at its current level if upcoming inflation data continues to improve. His comments reversed some of the hawkish sentiment that had dominated markets following Fed Chair Kevin Warsh’s Jackson Hole remarks the previous week.

The change was visible in interest-rate markets. According to the CME FedWatch tool, the probability of a rate increase at the Fed’s September 15–16 meeting fell to 50.4%, down from 63.2% one day earlier. The 10-year Treasury yield also declined to approximately 4.73% after reaching its highest level since November 2023 during the previous session.

For crypto markets, the implication is straightforward: expectations for stable interest rates reduce some of the pressure on risk assets. Higher yields can make cash and government bonds relatively more attractive while supporting the dollar, creating a less favorable environment for cryptocurrencies.

Bitcoin Reclaims $80,000 as Risk Assets Rally

Bitcoin traded near $80,270, up almost 3% over 24 hours, while Ethereum approached $2,500 with a 2.2% daily gain. XRP delivered a stronger move, rising approximately 6% during the same period, while BNB also participated in the broader recovery.

The move mirrored traditional markets. The Dow Jones Industrial Average gained approximately 453 points, or 0.9%, while the S&P 500 and Nasdaq each advanced close to 1%. The synchronized performance indicates that the latest crypto rally was driven primarily by a broader improvement in risk appetite rather than an isolated cryptocurrency catalyst.

Short Liquidations Magnify the Rally

The most notable feature of the move was the scale of forced positioning. CoinGlass data showed more than $500 million in total crypto liquidations over 24 hours, including approximately $416 million from short positions compared with $92 million from longs.

More than 119,000 traders were liquidated, while at least $327 million of short positions were reportedly closed within a single hour during the strongest part of the rally. When leveraged short positions are automatically closed, exchanges effectively execute purchases to cover those positions, creating additional upward pressure on prices.

This means part of Bitcoin’s recovery was mechanically driven by the derivatives market. A short squeeze can accelerate a rebound without necessarily indicating that equivalent amounts of new long-term capital have entered the market.

Macro Data Remains the Next Test

Bitcoin’s latest advance reverses part of the weakness triggered by Warsh’s hawkish Jackson Hole speech, which had pushed BTC as low as $76,877 and lifted rate-hike expectations toward 56%. The cryptocurrency is now again testing a level it has struggled to hold consistently this year.

The market’s next direction will depend heavily on whether economic data validates Waller’s more dovish interpretation. Inflation, employment data and the September FOMC decision will determine whether the recent improvement in rate expectations can persist. If inflation continues moderating, lower yields could provide additional support for crypto and other risk assets. Conversely, a renewed inflation surprise could quickly revive rate-hike expectations and challenge Bitcoin’s recovery above $80,000.