Bitcoin staged a sharp rebound on Wednesday, climbing nearly 6% to above $69,000 and reclaiming a level it had not reached since early June. The rally came after the U.S. Treasury announced plans to double its purchases of older, long-term government bonds.
Investors interpreted the move as a subtle form of quantitative easing that could weaken the dollar and boost scarce assets such as Bitcoin, according to Matt Mena, senior strategist at crypto research firm 21Shares, per Fortune, as quoted on Yahoo Finance.
The rally also triggered a major short squeeze. Short sellers were forced to cover roughly $1.5 billion in positions by purchasing Bitcoin. iShares Bitcoin Trust ETF IBIT was up about 6% on Aug. 19, 2026, while the fund is down 23.9% so far this year (as of Aug. 19, 2026). The $51-billion-asset ETF IBIT charges 25 bps in fees. The fund trades at an average daily volume of 45 million.
Bitcoin Rebounds After Prolonged Selling Pressure
The latest surge follows months of weak price action as Bitcoin struggled to recover from a severe sell-off last October. The crash triggered more than $19 billion in liquidations and left Bitcoin roughly 40% below the $115,000 level where it traded at that time, according to CoinGecko, as quoted on the above-mentioned article.
Over the past year, IBIT ETF has slumped 40.3% (as of Aug. 19, 2026). Note that investors have also increasingly priced in a pause in interest-rate hikes in recent weeks due to weakness in the labor market and softer inflation data. This created a more supportive backdrop for risk-on investing (read: 5 ETFs to Benefit From Cooling Inflation in the Near Term).
Meanwhile, U.S. spot Bitcoin ETFs attracted about $1 billion in inflows during the first two weeks of August, providing another important source of demand, as quoted on the above-mentioned source.
Bitcoin's rally extended across the broader crypto market. Ethereum and Zcash led major cryptocurrencies, with both gaining about 9% over the past 24 hours.
Regulatory Developments Add to Crypto Tailwinds
The proposed framework could offer some regulatory clarity for the crypto industry as lawmakers continue to debate the CLARITY Act. It would also ease certain federal securities requirements for qualifying crypto companies, streamlining token issuance and capital-raising activities, per the above-mentioned source.
Could Bitcoin Have Bottomed?
The latest rebound could indicate that Bitcoin has moved beyond the most severe phase of its bear market, according to Zach Pandl, head of research at Grayscale.
He also pointed to growing fiscal pressures as a potential driver of demand for alternative stores of value. The U.S. national debt is expected to reach $40 trillion before the end of August, while the war with Iran has contributed to higher inflation.
While a more severe slump has been noticed for Bitcoin in the past, the current favorable backdrop may open the doors for a steady rebound. Note that, in 2013, Bitcoin surged to new highs before collapsing more than 80%.
In 2017, the cryptocurrency reached nearly $20,000 before crashing to around $3,000 in the bear market that followed, representing a slump of about 84%. In 2021, Bitcoin hit $69,000 before falling to nearly $15,000 in 2022, erasing more than 75% of its value, per Binance.com.
Bitcoin Miners Focusing on AI Infrastructure
Bitcoin miners are evolving fast. Originally focused on mining, they are now leveraging their power-dense data centers to tap into the booming AI infrastructure market. By mid-2025, dozens of former Bitcoin mining companies had started redirecting their infrastructure into AI data centers, converting their GPU-heavy, energy-intensive setups into rentable compute farms for training, inference and high-performance computing, as quoted on datacenters.com.
Inflation-Hedge: A Moderately-Strong Driver for a Sustained Rally?
Bitcoin often boasts an inflation-hedge argument, which is largely based on its limited supply. Unlike traditional currencies that can be expanded by central banks, Bitcoin's supply is capped at 21 million tokens.
Supporters have long argued that this scarcity should make it a digital alternative to gold during periods of rising prices. However, real-world performance has often failed to match that theory. But then, Bitcoin fared better last October when Trump’s import tariffs were feared to raise inflation globally (read: Bitcoin ETFs: A Safe Haven or High-Growth Asset?).
ETF Exposure
Overall, stronger ETF inflows, expectations for easier monetary policy, regulatory progress, scarcity and concerns over fiscal sustainability could provide Bitcoin with a more favorable backdrop after months of selling pressure.
If you have a strong stomach for risks, you can bet on Bitcoin-heavy ETFs like Fidelity Wise Origin Bitcoin Fund FBTC, Grayscale Bitcoin Trust ETF GBTC, Grayscale Bitcoin Mini Trust ETF BTC and Bitwise Bitcoin ETF Trust BITB. These ETFs have an asset base of about $11 billion, $8.5 billion, $4.0 billion and $2.5 billion, respectively.
Like IBIT, FBTC also charges a 25-bps fee, while GBTC has a relatively high expense ratio of 1.50%. BTC is among the cheapest Bitcoin ETFs at 15 bps, while BITB charges 20 bps. All these funds have lost between 23% and 24% so far this year, although they gained around 6% on Aug. 19, 2026.
Note that Morgan Stanley Bitcoin Trust ETF MSBT, which debuted in April 2026, charges the lowest fee in the Bitcoin ETF space at 14 bps. The fund currently has an asset base of $440.4 million and has gained about 5% over the past month.
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This article originally published on Zacks Investment Research (zacks.com).
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