The outgoing week proved truly momentous for the cryptocurrency market. The leading cryptocurrency not only updated local highs but also demonstrated impressive momentum, outpacing traditional assets. Meanwhile, the Ethereum ecosystem received a warning about upcoming technical challenges, and U.S. regulators continued shaping a new regulatory reality.
Bullish Breakout: Short Squeeze and Record Inflows
The key event was bitcoin's rapid rally. As early as August 17, the leading cryptocurrency was outpacing the stock market in daily performance, which did not go unnoticed by analysts. Shortly after, prices surged: on August 20, the asset gained nearly 8% in a day, approaching the $70,000 mark for the first time in 11 weeks. The upward move was so powerful that within just a few days, digital gold broke through the $79,000 level, reaching $79,500 on Binance — values not seen since mid-May.
The driver of this move, in my assessment, was a classic short squeeze. The volume of forcibly closed short positions in the first 24 hours reached a record $2.7 billion. The trigger was the U.S. Treasury's announcement of plans to at least double the volume of Treasury buyback operations — a signal of liquidity support that the market perceived extremely positively.
Over the week, bitcoin rose more than 22.5%. Altcoins showed even more impressive momentum: Ethereum gained 29.3%, XRP grew by ~50%, and HYPE and Dogecoin — by 41.3% and 32%, respectively. Spot bitcoin ETFs recorded their largest weekly inflow since October 2025 at $1.92 billion, while Ethereum funds attracted a record $697 million. The Fear and Greed Index surged from 34 to 71 points, indicating a shift in market sentiment.
Ethereum Foundation Warning: Disruptions Ahead
Against the backdrop of overall bullish sentiment, the Ethereum Foundation (EF) team warned of potential issues. The upcoming Glamsterdam upgrade will change the gas model, which could take some wallets, indexers, and fee estimation tools offline. The reason lies in EIP-8037, which adds a separate state-gas dimension for operations that create new state. Sending ETH to a new address will cost more than the standard 21,000 gas units, and developers will need to revise code based on the old logic.
Regulatory Agenda: GENIUS Act and New SEC Rules
The U.S. Treasury presented a draft of rules for implementing the GENIUS Act — the first federal law on payment stablecoins. The document defines strict reserve requirements (1:1 ratio, limited list of assets) and provides for regular disclosures and independent audits. This is an important step toward the institutionalization of the market.
The SEC, in turn, proposed the Regulation Crypto Assets draft, which simplifies capital raising through tokens and introduces a "safe harbor" for certain digital assets. Companies will be able to raise up to $5 million over four years or up to $75 million over 12 months, subject to disclosure requirements. SEC Chairman Paul Atkins emphasized that these rules will not replace congressional law but will create a more sustainable foundation.
Technological Progress: Solana Speeds Up
It is also worth noting that the Solana team activated the first phase of reducing slot time from 400 to 350 ms on the mainnet. This is the first change since the network's launch, aimed at accelerating transaction confirmation. Plans include further reduction to 200 ms, but with a halt mechanism if the share of missed blocks increases.
My comment: This week's market dynamics confirm that cryptocurrencies remain highly sensitive to macroeconomic signals. However, a rally driven by a short squeeze is a double-edged sword: rapid growth is often followed by a correction. Regulatory initiatives, by contrast, create a long-term foundation for growth, and it is these that deserve closer attention than short-term price fluctuations.