Bitcoin pops to $77K as $1.21B in shorts get erased; D.C. policy signals flip the tape

Bitcoin’s latest leg higher looks less like a simple relief rally and more like a repricing of policy risk. After a week of market-friendly signals out of Washington, the tape flipped: BTC climbed 7.9% in 24 hours to about $77,137, tagging an intraday peak near $79,320. That put the weekly gain at 23.2%, even with Bitcoin still down roughly 31.8% versus a year ago, per CoinGecko.

Leverage paid the price. CoinGlass tracked about $1.5 billion in crypto liquidations across 178,777 traders over 24 hours, with approximately $1.21 billion of that coming from shorts. On the one-hour heatmap, Bitcoin-specific liquidations reached around $17.25 million, and the single largest wipeout was a $23.59 million BTC position on Hyperliquid. Earlier in the week, an additional ~$3 billion in shorts were torched as price momentum returned, keeping analysts split on durability.

The catalyst set is straightforward: the White House embraced the crypto market-structure Clarity Act, and there were indications regulators are working to bring Hyperliquid—an offshore perpetual-futures venue—onshore. The short squeeze is the headline, but the onshoring signal is the substance. If a major perp exchange migrates into a U.S.-regulated perimeter, several knock-on effects become plausible:

- Basis and funding: A clearer legal lane typically compresses risk premia. Narrower basis and more stable funding rates can reduce the incentive for persistent asymmetrical shorting that thrives on regulatory overhang and fragmented liquidity.

- Liquidity mix: Onshore access could draw more institutional flow into perps, rebalance venue concentration, and lessen tail risks driven by opaque liquidations offshore. Better margin standards and risk engines tend to moderate cascade dynamics, though crowded trades don’t disappear—they rotate.

- Price discovery: With more compliant capital participating in derivatives, correlation between spot and perps often tightens. That can make squeezes sharper in the short run but less frequent over time as open interest grows under stronger safeguards.

- Market psychology: Policy clarity changes trader behavior faster than new code does. Shorts that lean on policy uncertainty as a thesis often unwind quickly when the headline regime shifts, which is what reflexively amplified this move.

None of this guarantees sustained upside; it reframes the playing field. After a week like this, the immediate tells are funding, open interest, and spot-led follow-through. If funding normalizes without OI rebuilding aggressively, the rally may hand the baton to spot demand; if OI reloads too quickly, another flush is always possible.

The strength wasn’t isolated to BTC. Ethereum, Solana, and other large-cap tokens advanced alongside. Bitcoin’s market value hovered near $1.55 trillion, while 24-hour turnover topped $69 billion, indicating broad participation rather than a thin, mechanically driven pop.

What matters from here is whether the policy momentum converts into concrete rulemaking and venue transitions. If Hyperliquid does move onshore and the Clarity Act sets a predictable market structure, the market’s core risk premium—regulatory uncertainty—shrinks. When that happens, leverage stops dictating direction as often, and real capital can price growth rather than fear. The squeeze wrote the headline; the regulatory path is the story to watch.