Bitcoin Rally Fueled by Short Liquidations — SkimNews
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- Bitcoin rose 24.6% over five days in August while coin-denominated open interest fell 12.6%, indicating the rally stemmed from short unwinding, not fresh long positions.
- Short positions supplied 89% of all liquidated dollars during the rally, with approximately 64,000 BTC worth of open interest closed out, according to a Glassnode-Bybit report.
- The options market flipped after 361 consecutive days of puts pricing richer than calls, marking a sudden shift in sentiment during a single session.
- 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 held steady.
- More than $230 million in Bitcoin shorts were liquidated in a single session this week as prices surged past $80,000 following the Federal Reserve's dovish rate hike.
Why it matters: The rally’s reliance on short liquidations—not sustained demand—means it may not signal a durable bull run. Traders face higher risk in leveraged positions if price moves remain driven by squeezes rather than structural inflows, and a return of put premium could indicate the market absorbed the move without shifting regime.
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