How short liquidations cleared $500B in crypto positions before institutional buyers took over

Crypto added roughly $500 billion in market value in a matter of days as Bitcoin ran from about $63,500 toward $80,000 last week.A liquidation squeeze powered much of the first phase, and regulated investment products then supplied fresh capital once forced buying began to fade.Tom Lee told Milk Road that the crypto liquidation event showed how far “offsides” traders had become. He called the move a “course correction” that could open a much larger advance.Glassnode said Aug. 19 produced the largest short-liquidation day in its feed since 2019, and exchanges automatically closed short positions as prices moved against traders, turning bearish bets into mandatory buying during an already violent rally.CoinShares recorded over $2.9 billion of global crypto investment-product inflows in the week to Aug. 20, the largest weekly total of 2026. The first three trading days of the next week added another $1.65 billion.Rally phaseMain participantWhat happenedWhy it mattersStage 1Macro buyersTreasury buybacks, a weaker dollar, and liquidity support helped trigger the breakoutCreated the initial conditions for risk assets to rallyStage 2Short sellersShorts were liquidated as BTC moved from ~$...