Bitcoin: Selling positions propelled the rise

The bitcoin market experienced an unusual rebound in August, without a wave of new bullish bets. In five days, the price gained 24.6%, while the open interest denominated in cryptocurrency fell by 12.6%. A report from Glassnode and Bybit links this rise to liquidations of short positions. About 64,000 BTC of open interest disappeared during this phase. Sellers fueled the movement, while the options market confirmed persistent bearish pressure.

Liquidations dominated the rebound

According to the report, bitcoin’s 24.6% rise occurred. Active leverage decreased significantly during this period. Open interest denominated in cryptocurrency declined by 12.6%. The movement stems instead from the forced closing of existing short positions in the market.

In total, about 64,000 BTC of open interest were liquidated during this period. Short positions accounted for 89% of each dollar liquidated, according to Glassnode and Bybit. Most liquidations involved traders betting on a decline. This mechanism strengthened the price increase while leverage exposure decreased.

The report describes a movement linked to the unwinding of bearish bets. The bitcoin price did not rise solely due to an increase in long positions. The forced liquidation of sellers played a central role, and bitcoin is the focus of this sequence. This distinction explains why the price advanced despite the decline in interest.

The options market confirms Bitcoin’s selling pressure

The options market brings a crucial element. Puts, used to protect against a decline, cost more than calls for 361 consecutive days. Only one session interrupted this series, causing the rapid disappearance of a large part of bearish positions. The market then readjusted its prices in response to this change.

Bybit’s volatility index experienced an exceptional variation during this session. Its daily range reached four times its usual level, according to the report. The short end of the futures curve underwent a significant revaluation. Longer maturities moved little, suggesting that the market treated the episode as a one-time event, while Bitcoin remains central.

Bitcoin experienced a rapid rise as selling positions sharply reduced. Options and futures recorded adjustments. These adjustments mainly concerned shorter maturities. However, the data are insufficient to establish that a lasting market change has occurred.

One question remains about the sustainability of the movement

The report specifies that its data stop at the close of August 23. The analysis covers four crypto-native options platforms and excludes the CME. The figures describe this segment of options, not all platforms where Bitcoin trades. This detail limits conclusions to the universe studied by Glassnode and Bybit.

The liquidation dynamics continued after this phase. Bitcoin crossed above 80,000 dollars after a Federal Reserve decision with accommodative forecasts. This progress triggered a wave, with more than 230 million dollars of selling positions. On the market, liquidations exceeded 445 million dollars, while CoinGlass indicated 529 million over 24 hours.

The authors of the report leave one question: can we observe the reassessment in August last? A persistent movement would require an imbalance between the supply and demand of calls. Stability of short positions would remain necessary on the curve. Conversely, the return of a premium on puts, along with a decline in funding, would signal that the market has absorbed the event.

In the short term, the data show that liquidations are the main driver of the observed progression, with BTC remaining under observation. How positions, options, and funding evolve after this shock will determine what follows. The report therefore does not decide between a one-off episode and a lasting transformation. It does not decide on this structure.