Bitcoin and Ether bears get decimated amid 'squeeze-led' rally and Musk's X wants to pay creators in stablecoins: Crypto week in 5 stories

Bitcoin and crypto staged their strongest rally in months as Treasury intervention, regulatory moves and a historic short squeeze collided, while banks and technology companies pushed deeper into stablecoins.

Bitcoin topped $70,000 as more than $4 billion in crypto short positions were liquidated, while ether outpaced major tokens with a weekly gain of about 18%.

Washington advanced several cryptocurrency initiatives as regulators prepared rules for digital assets and stablecoins, even if Congress fails to pass the Clarity Act.

Stablecoins gained traction in mainstream payments, rising crypto prices bolstered corporate treasuries, and Coldcard issued new firmware after a security breach that cost users $114 million.

Bitcoin went ballistic this week (finally).

While more than $4 billion in short positions were liquidated, the bigger story is the pain the rally brought for the ether bears.

Ethereum's token saw the sharpest rally among the major cryptocurrencies. At one point on Wednesday, when the market started moving sharply, ETH rose nearly 19% over 24 hours, versus roughly 5%-6% for bitcoin. Currently, ETH is up about 18% in the last seven days, while bitcoin has risen about 8.8%, according to CoinDesk data .

The scale of the move saw a cascade of short positions getting violently liquidated as momentum brought in more momentum, after crypto spent much of this year doing pretty much nothing.

The rally brought hope to the market, but the short squeeze left some traders cautious.

"Squeeze-led rallies usually carry a question mark over whether they hold, because liquidations do the lifting. Here, the combination of ETF demand, the macro shift and the absence of heavy selling gives this one a longer runway, with small retracements along the way," said Bitfinex analysts.

While the rally took most of the attention, there was some significant news from Washington as lawmakers moved on several fronts for crypto regulations, traditional firms had moved deeper into stablecoin payments, and corporate crypto treasuries had suddenly looked healthier.

Here were five stories that defined the week.

1. Markets: Crypto goes ballistic — and shorts paid for it

Bitcoin crossed $70,000 for the first time since June after a violent move up on Wednesday.

The daily percentage changes for the largest cryptocurrency over the past year showed a market that had mostly ground through, with smaller gains and losses in 2026, punctuated by occasional violent moves. August’s cluster of green bars for bitcoin marked one of the strongest bursts of upside in months, according to CoinDesk data.

The rally followed after several catalysts lined up at once.

One came from the bond market. The U.S. Treasury’s buyback program supported liquidity in government debt, and longtime bond investor Mark Connors argued that the effect could help set up bitcoin’s next move toward $180,000 .

Another catalyst was the liquidation of short positions. With the two-day rally, over $4 billion in crypto shorts were wiped out.

But ether was where the squeeze got truly nasty for bears.

ETH became the biggest gainer among the top five cryptocurrencies, rising nearly 19% over 24 hours at one point on Wednesday. XRP and solana also gained more than 10%, while bitcoin climbed more than 5%, over the same time period.

The violent move took a toll on traders who got caught on the wrong side of the trade. One Hyperliquid trader offered the cleanest example of how brutal the move was: a wallet that had previously made $49 million shorting crypto lost $24 million on an ether short in about 12 seconds .

That was the setup traders were debating by Friday: was this the start of a real trend change, or had a crowded short simply been flushed out?

Analysts split on whether bitcoin’s breakout marked a new bull run , while BTC traders turned their attention to whether the market could test $80,000.

Though crypto is going up, the question remains whether or not it can hold.

"The obvious risk is the volume of bitcoin sent to exchanges in profit during this move, which could turn into the largest profit-taking wave of the year if it lands," said Bitfinex analysts.

2. Policy: Washington stopped waiting for Clarity

Throughout the week, crypto regulation moves were the most talked-about news until the rally took everyone's attention.

U.S. President Donald Trump pressed Congress to advance the Clarity Act during a White House gathering with technology and financial executives.

But regulators also prepared for the possibility that Congress did not act. Commodity Futures Trading Commission Chairman Mike Selig told staff to prepare crypto regulations even if the Clarity Act failed . Meanwhile, the Securities and Exchange Commission proposed its first major crypto-specific rule , Regulation Crypto, after unexpectedly reviving the proposal following a canceled meeting. The Treasury Department also proposed rules to implement the GENIUS Act , beginning work to define how the stablecoin law would operate.

The policy also supercharged one token's rally this week. Hyperliquid’s token, HYPE, jumped 11% after Trump said Wednesday that the CFTC’s Selig is working on a way to bring Hyperliquid into the U.S . Hyperliquid's growth earlier this year put a fresh spotlight on the popularity of perpetual futures, a market that has long been dominated by offshore crypto exchanges, while drawing attention of U.S. trading venues looking to capture some of that business at home.

The message from Washington grew clearer: Congress still matters, but regulators have started writing the crypto rulebook with or without it.