Bitcoin's rally ran on short liquidations, not new long bets

Bitcoin's sharpest five-day rally in two years did not come from traders piling into new long positions. According to a joint report from analytics firm Glassnode and exchange Bybit, the 24.6% climb in Bitcoin over five days in August ran almost entirely on the forced unwinding of existing short bets, as coin-denominated open interest fell 12.6% over the same period.

The decisive detail is the liquidation composition. Roughly 64,000 BTC worth of open interest was closed out during the stretch, and short positions supplied 89% of every liquidated dollar. In the options market, puts had priced richer than calls for 361 straight days before a single session flipped the run, ending roughly a year of downside positioning. Bybit's own volatility index traveled four times its normal daily range in one session.

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

Bitcoin's position relative to the prior benchmark is now being tested by a second squeeze. After the Federal Reserve paired its first rate hike since 2023 with a dovish forecast, Bitcoin blasted back above $80,000, liquidating more than $230 million in Bitcoin shorts and over $445 million across the market in a single session. The Glassnode-Bybit data covers four crypto-native venues excluding CME, so the figures describe the crypto-native market rather than every venue where Bitcoin trades. The next scheduled data point is the CPI release on October 14, followed by the Federal Reserve's next rate decision on October 28, 2026.