Bitcoin's Sharpest Rally in Two Years Ran Almost Entirely on Short Liquidations
Bitcoin’s sharp August rally was driven mainly by a short squeeze, not new bullish leverage. Over five days, BTC rose 24.6% while coin-denominated open interest fell 12.6%, showing existing short positions were being forced out. About 64,000 BTC in open interest was closed, and shorts made up 89% of liquidated dollar value. Options pricing also flipped: puts had been richer than calls for 361 straight days before one session reversed that pattern, signaling a rapid repricing of downside risk. The move was viewed as a likely one-off event because short-term futures pricing jumped more than longer-dated contracts. The same dynamic continued later, with another BTC surge above $80,000 triggering more than $230 million in Bitcoin short liquidations. The key question is whether call demand and front-end futures strength persist, which would suggest a lasting regime change.
