Bitcoin (BTC) reached a level of $85,326.10 on Sep. 21, marking an eight-month high for the leading cryptocurrency. The price action followed a period of forced buying driven by a short squeeze, with the asset gaining 6% in the last 24 hours. According to CoinGecko, the last time Bitcoin traded at this level was in late January.

The rally coincided with significant liquidations in the derivatives market. The onchain analytics platform CoinGlass reported that approximately $383 million in Bitcoin short positions were liquidated over the preceding 24 hours. Across different cryptocurrencies, more than $781 million in short positions were liquidated during the same period, with $659 million of that total attributed to short positions.

Other major digital assets also posted gains. Ethereum (ETH) surged to $2,731.56, a 6% increase in 24 hours, while XRP rose to $1.48, gaining 7.8%. The bullish sentiment extended to the decentralized exchange Hyperliquid, whose native token HYPE hit a new all-time high of $95.99. This move followed the exchange's rollout of a loan feature last week that allows users to borrow USDC and USDT using HYPE or Bitcoin as collateral.

Corporate treasury activity continued to support the market. Strategy (Nasdaq: MSTR) purchased 950 Bitcoin for $75.7 million between Sep. 14 and 20, bringing its total holdings to 846,000 BTC as of Sep. 20. Separately, Bitmine Immersion Technologies (NYSE: BMNR) acquired 27,562 Ether last week, increasing its balance sheet holdings to 5,983,940 ETH.

The recent price strength emerged despite recent headwinds for the sector. The crypto market had faced challenges just days earlier, including the failure of a Senate cloture vote on the CLARITY Act and the Federal Reserve raising interest rates for the first time since 2023.

In response, the Donald Trump administration implemented several pro-crypto measures. The Securities and Exchange Commission introduced a five-year "Innovation Exemption," which creates a pathway for qualifying platforms to trade tokenized U.S. stocks onchain. Additionally, the Commodity Futures Trading Commission issued a no-action position for certain software developers that connect users to regulated crypto exchanges.

Legislative progress also contributed to the market's outlook. The U.S. House Ways and Means Committee passed the Digital Asset Tax Certainty Act with bipartisan support. The bill provides specific tax provisions for dollar-pegged stablecoins and lending deals, applies wash-sale regulations to major crypto assets, and sets new guidelines for mining and staking income. It also exempts minor crypto transaction fees of $10 or less from certain taxes.

Furthermore, the U.S. House Committee on Financial Services passed the American Reserve Modernization Act of 2026 (H.R. 8957). This legislation aims to create a strategic Bitcoin reserve and a digital asset stockpile, fulfilling a promise made by Trump.

At the time of writing, Bitcoin was trading at $84,999, according to Decibel.