Ethereum tops $2,300 as Treasury buyback sparks massive short squeeze

Ethereum ↗ 1.12% surged roughly 18% on Wednesday, August 19, briefly topping $2,300 as a U.S. Treasury announcement sparked a broad crypto rally that cascaded into one of the largest short squeezes on record. More than $1 billion in Ethereum short positions were liquidated within 24 hours, propelling the token decisively above its 200-day moving average for the first time in months.

Treasury Buyback Ignites Risk Rally

The catalyst arrived from Washington. On August 19, the U.S. Treasury Department announced it would at least double the maximum size of its buyback operations for longer-dated nominal coupon securities, raising the cap from $2 billion to at least $4 billion per operation effective September 9. The move, aimed at providing "greater liquidity support in longer-dated nominal sectors," sent 30-year yields sharply lower and weakened the dollar — a combination that historically benefits risk assets like cryptocurrencies.cnbc+1

Bitcoin ↗ 0.28% rose as much as 8% and approached $70,000, while Ethereum outperformed with gains of roughly 18% to 20% over 24 hours. The rally unfolded in concentrated fashion: Ethereum traded sideways near $1,900 for most of the day before spiking to above $2,300 in a matter of hours as forced liquidations compounded the buying pressure.coinmarketcap+3

A Billion-Dollar Short Squeeze

The derivatives market bore the brunt of the move. According to multiple data sources, total crypto short liquidations approached $2.7 billion in 24 hours, making it the second-largest short squeeze on record after October 2025. Ethereum-specific short liquidations ranged from $740 million in a four-hour window to over $1 billion across the full day, depending on the data snapshot. Coinglass data showed short positions accounting for roughly 90% of all liquidations during the peak of the squeeze.seekingalpha+3

The breakout carried Ethereum above the 200-day simple moving average near $2,004, a level that had acted as resistance for months. Spot Ethereum ETF inflows added fuel, with BlackRock's ↗ 1.60% ETHA fund capturing $64.68 million of the $71.47 million in net inflows recorded on August 18. Broader August inflows into Ethereum-linked ETFs have reached $3.87 billion, surpassing their Bitcoin counterparts.moomoo+1

Regulatory Tailwinds and Caution Ahead

A White House meeting on August 19 between President Trump and crypto executives from Coinbase ↗ 4.30% and Ripple focused on advancing the Clarity Act, legislation intended to split regulatory oversight between the SEC and CFTC. Separately, the SEC unveiled a draft framework easing capital-raising requirements for crypto startups.ad-hoc-news+2

Despite the constructive backdrop, analysts urged caution. Ethereum's relative strength index climbed above 90 — an extreme overbought reading that historically precedes short-term pullbacks. The token last traded near $2,280, well above its 50-day moving average, with first support marked at $2,160 and the 200-day moving average near $2,000 serving as the critical level if profit-taking accelerates.moomoo+1