Bitcoin Tops $85,000, Highest Since January, as $648 Million in Short Bets Get Blown Out

The Rally, By the Numbers

Since the Senate blocked the Digital Asset Market Clarity Act on September 15 and Bitcoin sank to roughly $76,000 the next day, the cryptocurrency has climbed about 12% to hit $85,229 early Monday, according to TradingView and CryptoSlate data. That's Bitcoin's highest level since late January and a break above the 50-week moving average it had failed to hold for 45 straight weeks.

CoinMetrics had Bitcoin at $84,256 around 6:35 a.m. ET Monday, up 3.8%, per CNBC. Ethereum topped $2,700 for the first time since January too, according to Incrypted, while XRP hit $1.47 and Solana climbed to $115, per Yahoo Finance. Crypto stocks moved with it: MicroStrategy jumped over 16% in premarket trading and Coinbase gained roughly 5% in premarket trading, according to Yahoo Finance and 24/7 Wall St.

A Short Squeeze Did Most of the Heavy Lifting

The rally wasn't gentle. CoinGlass data cited by CryptoSlate showed about $750.5 million in leveraged crypto positions liquidated in 24 hours, with $648 million of that — roughly 86% — coming from short positions betting on further declines. Roughly 137,000 traders got wiped out.

CryptoQuant data showed net taker buying volume on Binance jumped from about $11 million to $618 million within an hour as European trading opened Monday, according to CryptoSlate. That's forced buying from traders covering losing bets, not necessarily new conviction.

Oil prices falling for a fourth straight session to around $102 a barrel, per Yahoo Finance, also helped. Lower oil eased inflation worries and pulled the 10-year Treasury yield back below 5%, making riskier assets like crypto more attractive. CryptoQuant told CryptoSlate the drop was tied partly to improving sentiment around potential U.S.-Iran diplomatic talks, a notable shift given the region's escalating tensions in recent days.

Congress Still Can't Pass a Crypto Bill

The rally comes despite, not because of, Washington. The Senate voted 49-50 against advancing the Clarity Act on September 15, with Sen. Thom Tillis (R-N.C.) flipping his vote to "nay" at the last moment, according to the Epoch Times. The bill needed 60 votes to break a filibuster and had cleared the Banking Committee back in May.

Sen. Cynthia Lummis (R-Wyo.) said the bill wasn't partisan, noting Democrats secured over 100 concessions and wrote roughly half the legislation's 630 pages. She called the failure "a vote against the consumer protections American families are counting on" and warned it hands the industry to foreign competitors.

Sen. Elizabeth Warren (D-Mass.) opposed the bill on the floor September 14, arguing it would "turbocharge President Donald Trump's ability to rake in billions and billions of dollars from crypto" while Americans struggle with affordability. A sitting president's family profiting from an industry his administration regulates is the kind of conflict voters have every right to demand answers on.

Lummis countered that the updated bill text included a provision letting state attorneys general impose ethics requirements on federal officials, and said Trump "voluntarily agreed to unprecedented ethics restrictions." Whether those provisions would have been sufficient is a fair question neither side fully resolved before the bill died.

Banks, meanwhile, wanted language curbing interest-style payouts on stablecoins, worried depositors would flee traditional accounts for higher-yield crypto products. That fight isn't settled either.

Regulators Moved Without Congress

Despite the legislative failure, the SEC and CFTC advanced crypto-related policies on their own on September 18, according to TradingView, which coincided with $159 million in net crypto ETF inflows that day. Bitwise CIO Matt Hougan told CNBC it's now "the most pro-crypto SEC in the history of the U.S." and "the most pro-crypto CFTC," arguing the absence of the Clarity Act may have ironically produced stronger pro-crypto regulation in the short term through agency action instead of statute.

Agency rules can be rewritten by the next administration overnight. A law passed by Congress cannot.

Is the Winter Actually Over?

Hougan called it "crypto spring" on CNBC, predicting the strongest and longest bull market in the industry's history and pointing to money rotating out of AI stocks into crypto now that the AI trade has "levelled off." BTIG analysts told clients Sunday that if $75,000 holds as support, bulls can target a push through $82,000 toward $90,000.

Not everyone's convinced. Trader Rekt Capital flagged a bearish divergence on the daily RSI before the breakout, warning of thin underlying momentum, according to TradingView. Galaxy Digital's Alex Thorn noted that reclaiming the 50-week moving average has often confirmed a bear-market bottom historically, but not always, pointing to false signals during the 2021-2022 bear market.

US spot Bitcoin ETFs saw $435 million in net inflows Friday, their biggest single day since September 3, per Farside Investors data cited by TradingView. But Bitcoin's cost basis for ETF investors sits at $85,638, according to Glassnode — meaning most ETF buyers are only now approaching breakeven, not sitting on gains. If oil prices reverse or Iran-related tensions flare back up, the same leverage fueling this rally, with open interest near its May record of $28.83 billion, could unwind just as fast in the other direction.