Woofun AI reports that Bitcoin surged from $64,000 to nearly $80,000 within four trading days, a move catalyzed by the Treasury's expanded buyback program, a White House meeting with crypto executives involving Trump, and the SEC's release of 'Regulation Crypto Assets' on August 19.

The specific mechanics of the Treasury's intervention involved doubling the maximum scale of long-term liquidity support buybacks from $2 billion to at least $4 billion per operation. This expansion covered 10-20 year and 20-30 year Treasury bonds, with operations scheduled between September 9 and November 4, providing a structural floor for risk assets during this period.

Technical indicators had already signaled a shift in momentum during the first half of 2026, as Bitcoin printed lower lows while the Relative Strength Index (RSI) formed higher lows. This 'bullish divergence' on the weekly chart, where each candle represents seven full days of trading, is significantly more potent than similar signals on the 15-minute chart, which traders often disregard due to low statistical significance.

Historical precedent suggests this pattern is critical, mirroring the bottom of the bear market in the second half of 2022. The divergence appeared on charts prior to the Treasury's announcement, the White House meeting, and the subsequent liquidation of short positions, indicating that underlying selling pressure was weakening before external catalysts accelerated the price action.

Daily chart momentum expanded dramatically in mid-August, with the RSI hovering just above 40 before spiking to over 80 and approaching 90 within a week. This 40-point gain parallels the market conditions of December 2022, when low volatility preceded a surge that pushed the RSI to 87.40 by mid-January 2023, marking a transition from compression to vertical expansion.

Woofun AI notes that trading psychology often misinterprets these extremes, as many traders attempted to short sell when the RSI exceeded 80, viewing it as a sell signal.

However, extreme RSI readings can persist for weeks once a new trend is established, rendering traditional overbought signals ineffective compared to the market behavior observed two weeks prior.

Fund flows corroborate the technical breakout, showing U.S. spot Bitcoin ETFs attracted $1.92 billion in net inflows over five trading days ending August 21. Ethereum (ETH) ETFs added $697.2 million, bringing the combined total to $2.6 billion, a sharp reversal from the previous week's $392 million outflow and the best single-week performance since 2026.

Bitcoin also breached its 200-day moving average for the first time in nine months, which stood at approximately $69,000 at the time. While short covering contributes to initial rallies, the elimination of bearish positions allows new capital from ETFs to drive sustained interest, even though cumulative net outflows for 2026 remain at roughly $2.9 billion.

Valuation models from Ecoinometrics place Bitcoin's support range between $67,000 and $78,000, with fair value near $72,000, suggesting current prices are testing the upper limits of funding flow support. Data further indicates leverage reduction, with futures open interest dropping 2.65% on Sunday and funding rates stabilizing near 0.01%, a lower high in speculative positioning.

Future market direction hinges on whether buying interest returns when subscription channels reopen, determining if this trend evolves into a broader bull market or succumbs to volatility. Traders will closely monitor subsequent signals to validate the divergence, as the current structure remains intact as long as prices hold above the recent lower high.