Ethereum Price Soars by 20% on Surprise U.S Treasury Policy
Ethereum (ETHUSD) is up about 19.8% to $2,291 on Wednesday, significantly outperforming a broad market rally, primarily driven by a macro liquidity injection that triggered a historic short squeeze.
A surprise U.S. Treasury policy shift doubled bond buybacks, lowering long-term yields and improving risk appetite across crypto. The U.S. Treasury’s August 19 announcement to double its bond buyback cap to $4 billion per operation triggered a sharp drop in long-dated yields.
Longer-term U.S. Treasury yields dropped sharply after the Treasury Department announced that it would increase the size of its government debt repurchases by “at least double” in a surprise move.
The announcement also came on the day Treasury announced that outstanding public debt had reached $40 trillion for the first time.
The yield on the 30-year Treasury bond plunged from 5.26% to as low as 5.18%. The 10-year yield, which has a heavy hand in steering consumer borrowing rates, was less affected by the announcement but still dropped from 4.68% to 4.63%.
Lower yields reduce the discount rate for future growth, making assets like Ethereum more attractive and signalling looser financial conditions.
The rally was ignited by a macro-driven improvement in risk sentiment, not Ethereum-specific news. It shows a 76% correlation with gold, indicating a rates-driven move.
The official start of the expanded buyback program on September 9.
The sharp upward move triggered massive liquidations – Over $466 million in Ethereum short positions were “vaporised” in 24 hours, creating a feedback loop in which forced buying by liquidated shorts propelled prices higher.
The move was amplified by extreme bearish leverage. This cleared out downward pressure but leaves the market vulnerable if spot demand doesn’t sustain the breakout.
Ethereum has broken above the critical $2,000 resistance and its 7-day SMA at $1,889. The RSI-14 at 57.39 suggests there is room for further gains before it becomes overbought. The immediate bias is bullish, but the move is extended and reliant on continued macro support.
Sustained spot buying to defend $2,100. The next key Fibonacci extension target is $2,272 (161.8%). A rejection here could lead to a retest of the $2,000 support.
Ethereum’s surge is a combination of a favourable macro shock and a violent unwind of crowded short bets, putting bulls in firm near-term control.
In other news, Cash App integrated with MoonPay on August 18, 2026, enabling its 59 million users to purchase Ethereum (ETH), XRP, Solana (SOL), and USDT directly. This marks a significant expansion beyond its previous support for only Bitcoin and USDC.
Purchases are routed through MoonPay, with assets sent to external wallets like MetaMask or Ledger, providing a seamless path to self-custody without Cash App having to build its own custody infrastructure.
This is bullish for Ethereum because it dramatically lowers the barrier to entry for tens of millions of mainstream users, funnelling new demand and reinforcing ETH’s position as a core, accessible digital asset. Ethereum Gains on Spot ETF Inflow, Cooling US Inflation Data
