Bitcoin rallied 24.6% in five August days with short liquidations accounting for 89% of liquidated value, despite declining active leverage.
Macro & Markets ·
Bitcoin surged 24.6% over five days in August while active leverage declined, indicating the rally was driven primarily by forced unwinding of short positions rather than fresh bullish buying. A joint analysis from Glassnode and Bybit found that short positions accounted for 89% of liquidated value during the period, with roughly 64,000 BTC worth of open interest closed out as coin-denominated leverage fell 12.6%.
The mechanics of the move reflected capitulation across derivatives markets. The options market flipped after 361 consecutive days of puts pricing richer than calls, signaling a sharp repricing of downside protection. Bybit's volatility index moved four times its normal daily range in a single session, while the front of the futures curve repriced sharply even as longer-dated contracts remained relatively stable—patterns the report's authors interpreted as indicators the market viewed the event as one-off rather than a lasting regime shift.
What remains uncertain is whether August's repricing proves durable. The report identifies two possible paths forward: if the shift sticks, call skew and front-curve strength would persist; if the market simply absorbed the event rather than entering a new regime, put premium would return alongside declining funding. The analysis covers only four crypto-native options venues and excludes CME, so figures describe the crypto-native market specifically.