Bitcoin’s sharpest rally in roughly two years came with an unexpected detail: traders were not rushing in to buy the move. They were being forced out of bearish bets.
A new report from Glassnode and Bybit found that Bitcoin gained 24.6% over five days in August while coin-denominated open interest, a measure of active leverage, dropped 12.6%.
That combination changes the story. The rally was less about a fresh wave of traders betting on higher prices and more about existing short positions being forcibly unwound as Bitcoin moved against them.
Around 64,000 BTC worth of open interest disappeared during the stretch. Shorts accounted for 89% of the dollar value of liquidations, turning a price surge into a very expensive exit for bearish traders.
The options market was already carrying a similar tension.
Puts, which traders use to position for or protect against a decline, had been priced above calls for 361 consecutive days. Then one trading session snapped that pattern, as the market rapidly repriced roughly a year of downside positioning.
The move was abrupt enough to register across derivatives markets. Bybit’s volatility index covered about four times its usual daily range in a single session.
At the same time, the front end of the futures curve moved sharply while longer-dated contracts barely budged. The signal was subtle but important: traders appeared to treat the move more like a sudden event than evidence of a completely different market regime.
Bitcoin’s rally came with an awkward passenger
That distinction matters because a squeeze can push prices dramatically without creating the kind of new positioning that might support a sustained trend.
The August data showed precisely that tension. Bitcoin was rising while leverage was falling, with short sellers providing much of the forced buying pressure.
There is also an important limitation to the report. The analysis comes from a Glassnode and Bybit collaboration using data through the settled close of August 23. Glassnode’s options coverage spans four crypto-native venues and excludes CME, meaning the figures describe that segment of the market rather than every place where Bitcoin trades.
And the mechanics seen in August did not simply disappear.
Bitcoin climbed back above $80,000 this week after the Federal Reserve delivered its first rate hike since 2023 alongside a dovish forecast. The move triggered another wave of forced exits, with more than $230 million in Bitcoin shorts liquidated and more than $445 million in short positions wiped out across the broader market in a single session.
Over 24 hours, CoinGlass recorded roughly $529 million in total liquidations, with shorts again making up the majority.
That leaves the central question hanging over the rally: was August the beginning of a lasting change in positioning, or just an unusually violent repricing?
Glassnode’s report points to a few clues. A durable shift would be visible in options skew remaining tilted toward calls and in the front of the futures curve staying firm.
A reversal would look different. Put premiums could return, funding could fade, and the market could effectively absorb the shock without entering a new phase.
For now, the numbers tell a more complicated story than a simple surge in bullish conviction. Bitcoin can rise fast even when traders are not adding leverage on the way up. Sometimes, the fuel is already sitting on the other side of the trade.