Bitcoin Squeezes Back Above $65K — and the Bond Market Flashes Its Loudest Warning Since 2007

Two markets told two opposite stories on Tuesday. Bitcoin touched $65,000 for the first time since August 10, completing a violent round trip from a weekly low near $62,700 in barely 48 hours. On the same day, the 30-year US Treasury yield climbed to 5.3% — the highest level since 2007, with similar bonds in Canada, Japan and Germany trading at decade highs. One asset is screaming that the worst is over; the other is pricing in the worst in 19 years. Someone is wrong, and the next few weeks will decide who.

A squeeze, not a breakout

The rally began on Monday as a textbook short squeeze. Per data compiled by CryptoQuant and Cointelegraph, bitcoin jumped 3% to $64,550 on Bitstamp, with short positions dominating order books on Binance, Bybit, OKX and Deribit. The result: 637 BTC of shorts liquidated on Monday — the biggest single-day total since July 21 — while the funding rate on HTX briefly spiked to 0.05%.

Tuesday added a second act: after fading to an intraday low near $62,750 in the morning, bitcoin reclaimed $64,000 and then pierced $65,000 shortly after the Wall Street open, settling around $64,750 by mid-afternoon, up roughly 1% on the day. Ether followed to about $1,915, and the total crypto market cap recovered to $2.28 trillion.

The technical picture, however, is emphatically not a breakout. Peter Schiff was quick to point out that $65,000 has been the key resistance level bitcoin has failed to break since July, and derivatives data shows a liquidation cluster stacked above $65,000 — fuel for a continuation if it breaks, or for another flush if it doesn’t.

The “liquidity trap” warning

CryptoQuant’s read of the move is blunt: the Monday spike was engineered through thin order books and derivatives positioning, not genuine demand. Without spot buying and, crucially, without inflows into US spot bitcoin ETFs, the analyst firm describes the bounce as a low-volume “liquidity trap.” The funding-rate reset from 0.006% to 0.003% over 24 hours could even set up further squeezes — but each one, in this view, is a magnet for sellers rather than an accumulation signal.

That is the crux of Tuesday’s contradiction. The move above $65,000 is real, but its foundation — spot demand — is exactly what the flow data has been failing to show.

The bond market’s 2007 flashback

The macro backdrop could hardly be more hostile to a durable risk-asset rally. The yield on the 30-year Treasury rose Tuesday to 5.29–5.34%, the highest since 2007, with the 10-year near 4.65%, according to The New York Times and Bloomberg. This is a global phenomenon: Canadian, Japanese and German long bonds are all at multi-year highs, driven by surging government spending, a flood of long-dated issuance, and inflation stuck above the Fed’s target — July CPI came in at 3.4%.

BNY Mellon’s summary is sobering: “Bond prices are sending warnings.” With the Federal Reserve in its August blackout and no FOMC meeting until September 15–16, markets have begun pricing the unthinkable for a post-war Fed: a possible rate hike by year-end if inflation stays hot and oil — Brent was near $92 a barrel in the morning, easing to ~$84 WTI after Washington said the Strait of Hormuz is “open and operational” — keeps feeding the pressure. The S&P 500’s rebound from two-week lows near 7,696 is, for now, as fragile as bitcoin’s.

Wall Street’s $1 billion counterargument

Then came the 13F season, and it complicates the “no spot demand” thesis. In its Q2 2026 filing with the SEC, released Friday and widely flagged over the weekend, Jane Street disclosed approximately $990 million in spot bitcoin ETF holdings as of June 30 — with $828 million, 84 cents of every dollar, concentrated in BlackRock’s IBIT, and the remainder split between Fidelity’s FBTC and Grayscale’s GBTC.

The nuance matters. Jane Street is an authorized participant in these ETFs — it creates and redeems shares as part of its market-making business, and a 13F captures only the long side of the book at a single date. The position reflects client demand and inventory as much as conviction. But the trajectory is still striking: after cutting IBIT by 71% in Q1, Jane Street rebuilt to nearly $1 billion by June 30 — even as the firm reportedly absorbed a $15 billion trading loss in July, its worst month in roughly a decade, while still booking more than $40 billion in net trading revenue year-to-date, surpassing its 2025 full-year record.

Jane Street is not alone. Edelman Financial’s $34 million bitcoin ETF position now tops its Amazon stake; Harvard’s endowment held its $101 million IBIT position flat; UBS disclosed roughly $90 million in IBIT exposure, up about 230% since year-end 2025 including call options. The ETF wrapper is consolidating institutional demand into a single product — IBIT — with compounding effects on liquidity and fee pressure across the fund complex.

ETFs: outflows at the margin, structure at the core

The flow tape, though, remains the weak point. US spot bitcoin ETFs posted three consecutive days of outflows through Friday, August 14 — minus $57.6 million on Friday alone — after the strongest week since mid-April ($853.5 million in the week ended August 7, led by IBIT’s $693.7 million). August is still net positive at roughly +$464 million, cumulative net inflows stand at $51.8 billion since January 2024, and total net assets sit at $76.6 billion. But the most recent prints are red, and CryptoQuant’s point stands: squeezes without ETF inflows tend to fade.

Prediction markets price exactly that tension. Traders see a 100% probability bitcoin stays above $60,000 on August 19 and 82.5% odds of holding $64,000 — up 18 points in 24 hours — but the longer horizon is cooler: 93% for $62,000 by August 23, and just 63% for $64,000. A firm floor, a grind for a ceiling. Indicative data only — not investment advice.

The September calendar decides

Three dates will resolve the contradiction. September 15 is the earliest procedural vote on the CLARITY Act — the Senate returns from recess on the 14th, and Majority Leader Thune’s pre-recess cloture filing needs 60 votes; Galaxy estimates only ~10% odds of enactment in 2026. The same day opens the FOMC meeting, where the hike-or-hold debate hits the tape. And mid-November, when Jane Street’s Q3 13F lands, will show whether the $990 million was accumulation or inventory rotation.

Until then, bitcoin’s squeeze is a statement — but the bond market just made a louder one. The falsifiable question for traders: does spot demand follow the price, or does $65,000 reject it again? In Europe, meanwhile, regulators delivered the first published MiCA penalty — €70,000 against Bitpanda — a reminder that the regulatory regime is tightening on both sides of the Atlantic.

Data: Polymarket (gamma-api + clob), CryptoQuant, Cointelegraph, TFTC, SoSoValue, Reuters, Bloomberg, The New York Times, Fortune, USA Today. Indicative data only — this article is informational and does not constitute investment advice.