The cryptocurrency market was essentially muted for many, many weeks. Ever since the May surge from $BTC to over $82,000 and the subsequent crash to under $58,000 on July 1, the market has remained dull with little to no movement from the larger caps.
Then it all changed within hours on Wednesday afternoon as something unusual happened. Essentially all crypto assets exploded suddenly to new local peaks (some to ATHs, such as HYPE), with $BTC leading the pack with a surge from under $65,000 to almost $80,000 before it pulled back slightly.
The speed of the rally and the subsequent decline suggest that leverage, rather than a single fundamental catalyst, has played a big role.
From Calm to $500B+ Rally
The analysts at the Kobeissi Letter weighed in on the recent market change, indicating that crypto was effectively “frozen” for 110 consecutive days – between May 1 and August 19. That might be a bit of an exaggeration since $BTC experienced some volatility within this period, including the aforementioned surge above $80,000 and the crash that followed.
Nevertheless, the real change happened abruptly at around 8:30 AM ET on August 19, when the entire market went on a tear. Less than a day later, the market had experienced what the Kobeissi Letter described as its “seventh-largest liquidation event on record.”
This unexpected recovery didn’t die immediately, as many of the previous attempts did. Just the opposite; the deleveraging was followed by another surge. Within a day and a half, the total crypto market cap had increased by around $500 billion as $BTC approached $80,000 for the first time since mid-May.
There was no single crypto-specific announcement large enough to explain the entire move. However, it coincided with Trump’s Crypto Summit in the White House and was boosted by the Treasury Department’s decision to increase purchases of longer-dated government debt.
You may also like:
- $BTC, $ETH, XRP Tumble as Wintermute Builds Heavy Short Positions
- Bitcoin’s Rally to $80K Sends Investor Greed to Highest Level Since the October 2025 Crash
- Bitcoin and Gold Are Surging Together: The ‘Debasement Trade’ Is Back
According to the analysts, though, Treasury yields subsequently erased their initial decline within a day while the crypto market remained substantially higher, suggesting another force was at work.
Institutional demand returned as well, with $2.6 billion entering the spot Bitcoin and Ethereum ETFs.
Leverage Made It a Rollercoaster
The other big argument that can be made, the analysts continued, is that speculation, in the form of leverage, was rebuilt rapidly. After $BTC neared $80,000 and many alts posted massive double-digit gains, traders piled into leveraged longs.
The consequences became obvious during Saturday’s sudden flash crash as roughly $500 million in late longs were wrecked within minutes when $BTC dipped by $2,000, and $ETH dropped by 5%. Many alts suffered even worse short-term losses.
The Kobeissi Letter’s analysts said that at 12:30 AM ET on Saturday, about $110 billion disappeared from the total cap in just 20 minutes, which helps explain the market’s erratic behavior.
After months of dull price action, the initial breakout forced bearish positions to close, accelerating most assets higher. However, the rapid surge attracted FOMO leveraged longs, leaving the market vulnerable to equally violent liquidation cascades in the opposite direction.