Bitcoin shorts squeezed $6.55B in August – Weak demand raises September doubts

Following a bullish August rally, all eyes are now on what September has to offer.

According to the data from CoinGlass, Bitcoin is set to close August with more than 24% ROI, marking the best monthly performance since the 2017 cycle.

The asset’s rally left the derivatives market speechless as it triggered a significant short squeeze, with bearish traders quickly liquidating their positions. 

As the chart below shows, over the last two weeks, more than $9.71 billion has been liquidated from the crypto market, including $6.55 billion in shorts and $3.16 billion in longs.

Thus, shorts accounted for about two-thirds of total liquidations, which means that they were heavily squeezed as Bitcoin surged higher.

Naturally, the next question is: Where is Bitcoin [BTC] headed next?

Based on the information provided by CryptoQuant, it looks as though the market participants are bullish, with Bitcoin’s funding rates on Binance increasing by more than 42% in less than a week, although BTC is consolidating below the $80,000 level.

Many leveraged positions have been liquidated, and the market has reset. This leaves the door open for another move higher.

But what if the on-chain data is telling an entirely different story? Is it possible that Bitcoin’s latest leg higher is simply the deleveraging unwind and not a sign of fresh spot demand?