Crypto shorts lose $1.24B as Dogecoin contributor warns of bull trap

Crypto extended its rally into a third session, wiping out $1.24 billion in shorts as a Dogecoin contributor warned of a bull trap.

Short sellers lost $1.24 billion in 24 hours as crypto extended its rally into a third day, with Dogecoin up 10.11% to $0.0842.

"It is good to see the market moving in a different direction, but be extremely careful," Mishaboar, a vocal Dogecoin community member, said on X. The warning points to the possibility that the current move could turn into a bull trap, a scenario in which prices rise convincingly enough to attract bullish positions before reversing sharply lower.

The rally traces back to the bond market. The US Treasury doubled its long-end buyback operations to at least $4 billion per operation on August 19, pushing the 30-year yield down from 5.34% to 5.196% and weakening the dollar to a three-month low. Spot Bitcoin ETFs recorded about $517 million in net inflows on Wednesday, their strongest day since May, while total liquidations reached $1.24 billion across 141,191 traders. Long positions gave up only $174.41 million.

The sustainability of the move depends on whether spot buyers replace the liquidated shorts. Bitcoin trades roughly 40 percent below its $126,080 record set on October 6, 2025, and overbought signals will be watched for a potential reversal. The Treasury's expanded buybacks do not begin until September 9, meaning the current rally has been carried largely by liquidation cascades rather than fresh capital.

Shorts lose $1.24B as liquidation cascade builds

Bitcoin drove $789.68 million of the short losses after climbing 8.4% to $74,998, touching an intraday high of $75,744 early Friday — its strongest print since May 27. That peak stopped narrowly below the True Market Mean of $75,800. Ethereum followed with $206.88 million in liquidations, while XRP added $41.94 million.

XRP led the large caps with a 16.2% daily gain to $1.26, extending one of the token's strongest stretches since 2020. Ethereum climbed 10.1% to $2,315, comfortably ahead of Bitcoin's move. Zcash and Bitcoin Cash posted gains of 18% and 21%, respectively.

The liquidation loop has now run for three sessions. Shorts lost $1.3 billion in 60 minutes as BTC climbed 2.5%, and yesterday's short liquidations reached $2.74 billion as 172,202 traders were wiped out.

Treasury buybacks and White House meeting fuel the move

Mishaboar questioned the circumstances surrounding the rally, saying he would not put too much trust in a move associated with a "high-profile crypto conference." A White House event on Wednesday had executives from Coinbase, Gemini, Ripple, and Chainlink in attendance, with crypto rallying afterward. Trump also met with Ripple CEO Brad Garlinghouse and pressed the Senate to pass the CLARITY Act on crypto regulation.

However, cryptocurrencies are rallying alongside hard assets like gold, which traded near $4,449 per ounce, while the dollar depreciated against major currencies. This suggests factors beyond the White House meeting may have contributed to the move. The Treasury is expected to double its buybacks of long-term US bonds to at least $4 billion per operation through early November.

XRP has cleared five resistance levels in three days, reclaiming $1.00, a descending trendline at $1.06, the 50-day moving average at $1.07, and the 100-day at $1.15. At $1.24, it now trades above the $1.20 ceiling that capped it in June and July. The token passed USDC into fifth place by market value at $77.47 billion, with a $5.20 billion lead over the stablecoin.

Spot XRP ETFs recorded $8.16 million in inflows across the first three days of this week, more than the whole of last week. Those funds now hold more than $1 billion in net assets, up from $933 million on August 14.

The rally rests on something that has not happened yet. Treasury's larger buybacks do not begin until September 9, so none of that money has entered the market. Liquidations carried the move, and those stop once the short positions are gone, which means fresh buyers must take over from here. The 30-year yield holding below 5.10% would do more for the XRP price than the September 15 CLARITY vote.

This article is for informational purposes only and does not constitute investment advice.