Bears Got Cooked: 89¢ of Every Liquidated Dollar Was a Short 🥩

Bitcoin's sharpest rally of a two-year drawdown ran almost entirely on forced unwinding of bearish bets, according to a joint report from analytics firm Glassnode and crypto exchange Bybit. Over five days in August, $BTC climbed 24.6% even as coin-denominated open interest fell 12.6%, a combination the report describes as a fingerprint of short liquidations rather than fresh long demand. Roughly 64,000 BTC of open interest was closed out, and short positions accounted for 89% of every liquidated dollar during the stretch.

The options market echoed the move. Puts had priced richer than calls for 361 straight days before a single session ended the run, flipping roughly a year of downside positioning. Bybit's volatility index moved four times its normal daily range in one session, and the front of the futures curve repriced sharply while longer-dated contracts barely moved, a sign the market read the move as a one-off rather than a lasting regime change.

The pattern has not faded. Bitcoin crossed back above $80,000 this week after the Federal Reserve paired its first interest rate hike since 2023 with a dovish forecast. The move triggered another squeeze, liquidating more than $230 million in Bitcoin shorts and over $445 million across the market in a single session. CoinGlass data showed roughly $529 million in total liquidations over 24 hours, the majority again from shorts.

The report flags the open question its own data raises: whether August's repricing sticks. A durable shift would show up as skew holding call-side bid and the front of the futures curve staying firm. A return of put premium alongside fading funding would instead mark it as an event the market absorbed, not a new regime it entered.

The broader backdrop has been turbulent. The Senate voted 49-50 against advancing the Clarity Act, and the Bank of Japan delivered a surprise rate hike. Despite those headwinds, Bitcoin's share of total crypto market value slipped from 64% to 59%, indicating traders rotating profits into smaller tokens as $BTC reclaimed the $80,000 level.