Bitcoin Rally Powered by Short Liquidations
A recent analysis by Glassnode and Bybit found that Bitcoin's significant price rally in August was largely driven by short liquidations rather than fresh bullish bets.
The report noted that over five days, Bitcoin rose by 24.6%, while coin-denominated open interest fell by 12.6%. This meant that the rally ran on the forced unwinding of existing shorts, rather than traders piling into new long positions.
Roughly $64,000 worth of open interest was closed out during this period, and short positions supplied 89% of every liquidated dollar. The options market also told a similar story, with puts pricing richer than calls for 361 straight days before flipping in a single session.
The report's authors flagged the question of whether August's repricing will stick, noting that a durable shift would show up as skew holding call-bid and the front of the curve staying firm. However, a return of put premium alongside fading funding would instead mark it as an event the market absorbed, not a new regime.