Leverage Squeeze Hits Long Traders as Open Interest Weakens

A sharp change in market dynamics occurred over the weekend as Bitcoin's rally squeezed out short sellers and then reversed to hit leveraged longs. According to CoinGlass, $101.39 million of crypto long positions were liquidated over four hours on August 23, accounting for almost 86% of the total. This translates to a whopping $250.57 million in 24-hour liquidations.

Bitcoin contributed $38.66 million to the four-hour long liquidations and $55.82 million over 24 hours. At the time, BTC traded near $76,088, down about 1.8% from the previous day's peak of $80,000. Since then, Bitcoin has recovered slightly to near $77,300.

The positioning data showed a sharp change in who was being forced out, but also revealed that leverage was shrinking during the pullback. CoinGlass placed aggregate Bitcoin futures open interest at $54.54 billion, down 2.65% over 24 hours. Major perpetual funding rates were near the 0.01% baseline, and the aggregate account long-short ratio stood at 0.9238.