Bitcoin's Sharpest Rally in Two Years Ran Almost Entirely on Short Liquidations

In brief

• Over five days in August, Bitcoin rose 24.6% while coin-denominated open interest fell 12.6%, meaning the rally ran on unwinding short positions rather than fresh bullish bets.
• The options market flipped after 361 straight days of puts pricing richer than calls, and the front of the futures curve repriced while the long end held—signs of a one-off event, not a regime change.
• The data comes from a joint Glassnode-Bybit with numbers through August 23, covering four crypto-native venues, excluding CME.

Bitcoin's most violent rally of its two-year drawdown wasn't powered by fresh bullish bets. It was powered by bears getting crushed, according to a new report from analytics firm Glassnode and crypto exchange Bybit.

Over five days in August, Bitcoin climbed 24.6% even as coin-denominated open interest, a measure of active leverage, fell 12.6%, the report found. That combination is the tell: rather than traders piling into new long positions, the move ran on the forced unwinding of existing shorts.

Roughly 64,000 BTC worth of open interest was closed out, and short positions supplied 89% of every liquidated dollar during the stretch.

The options market told the same story. Puts, the contracts traders buy to protect against a fall, had priced richer than calls for 361 straight days. A single session ended that run, flipping roughly a year of downside positioning as the market scrambled to reprice.