Bitcoin Shorts Squeezed $6.55B in August, Weak Demand Raises September Doubts

Bitcoin's end-of-August rally has raised questions about its sustainability. The cryptocurrency surged higher, triggering a significant short squeeze in the derivatives market.

According to CoinGlass data, over $9.71 billion was liquidated from the crypto market in the last two weeks, with shorts accounting for around two-thirds of that total at $6.55 billion.

This suggests that the recent move may have been driven primarily by a short squeeze rather than strong buying demand.

The market's on-chain data is telling an entirely different story, however. Smaller holders were accumulating as Bitcoin dipped below $67k, but larger investors (such as STHs) are among the first to cash in when the market turns risk-off or fails to break key resistance.

This trend may already be starting to weigh on investors, with Bitcoin's spot demand weakening and sentiment turning bearish. Analysts expect a major move from ETH/BTC, but if $BTC struggles while $ETH breaks higher, it could signal that capital is rotating away from Bitcoin.