Cryptocurrency markets experienced their biggest short position liquidation day in history on Wednesday, with over $1.44 billion in shorts liquidated within just a few hours. According to AMBCrypto data, $1.61 billion in liquidations occurred over 24 hours on August 19, with approximately $1.44 billion coming from traders betting on lower prices. Bitcoin saw $861.06 million of those short losses, while Ethereum was responsible for another $424.21 million. This massive liquidation contributed significantly to the sentiment shift, with the crypto Fear and Greed Index climbing to 75 Greed on August 20 from yesterday's 46 Fear reading. The index, which runs on a scale from zero to 100, with readings above 50 indicating Greed and scores near 25 signaling Extreme Fear, reached its highest level on the index's 30-day chart. With the gauge now in the 70s, investor sentiment in the crypto market has officially entered the 'greed' phase.
Bitcoin gained 8.1% over 24 hours to trade at $72,465 as of latest reports, with the price briefly reaching $72,868 during the rally. The cryptocurrency's surge began with Bitcoin below $65,000 on August 19 before other assets followed its lead. Ethereum led the majors with an 18.4% daily gain to $2,281, while Solana added 11.9% and XRP rose 11.2%. Bitcoin's rally was particularly significant as it reclaimed the $69,000 level on Aug. 19 after the U.S. Treasury announced an expansion of its Treasury buyback program. The index blends five inputs, with volatility and market momentum counting for 25% each, both of which flipped hard once prices moved significantly. Bitcoin's dominance in the industry remains strong at 56.8%, while Ethereum holds 11.1% of the market capitalization.
Spot Bitcoin ETFs saw net inflows of $189.3 million on Tuesday, while spot Ethereum ETFs recorded $71.5 million in net inflows in the past 24 hours, as reported by SoSoValue. This institutional capital flow provides fundamental support for the current rally, with traders Michael van de Poppe and KillaXBT noting that Bitcoin's surge to $69,000 has wiped out shorts and cleared liquidity above $68,200. Van de Poppe expects a pullback rather than immediate continuation, viewing $66,500–$67,000 as a buying zone before a potential move toward $72,000–$73,500. The strong buying momentum pushed Bitcoin above $69,000 and Ethereum above $2,300, triggering a major short squeeze across the market. However, according to AMBCrypto analysis, weekly ETF inflows are currently at over $1 billion, far below the $3 billion peak during the October cycle, leaving room for further institutional demand growth.
Crypto market sentiment is flashing overbought signals with the Fear & Greed Index above 70, raising significant pullback risks according to AMBCrypto analysis. The weekly RSI indicator shows an extremely overbought condition, with the current setup remarkably similar to the October 2025 cycle breakdown. The overall crypto market cap has risen by over 22% from the previous week, while the Bitcoin Coinbase Premium Index peaked at 0.18, suggesting U.S. buyers were accumulating Bitcoin at a rapid pace before the market sentiment turned to greed. However, this U.S. investor demand factor appears to be absent this time around, making way for higher spot buying potential. As noted by AMBCrypto, several large-cap cryptocurrencies are already in negative territory, indicating that profit-taking has already begun, though the situation changes considerably when viewed from weekly rather than daily timeframes.
The broader cryptocurrency market demonstrated remarkable strength, with total market capitalization surging from $2.29 trillion to $2.45 trillion in just 24 hours, representing a 7.5% daily growth. The Overall (DeFi) Decentralized Finance market shockingly escalated 9.8% over the last 24 hours, recording a market cap of $64.46 billion and trading volume of $5.24 billion. Defi dominance globally marked 2.6%, reflecting widespread risk-on sentiment across major cryptocurrencies. The stablecoin market reflected a 0.5% positive change over the past 24 hours, with a capitalization of $288.26 billion and trading volume of $105.1 billion. Strong institutional and retail interest in Bitcoin, bullish expectations surrounding the CLARITY Act, positive U.S. crypto policy developments, and optimism around Hyperliquid and AI-related projects supported the demand surge. President Donald Trump's renewed push for Congress to pass the CLARITY Act also kept crypto policy in focus in Washington, though neither development alone establishes why Bitcoin rallied so sharply.
