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Record Squeeze Triggers Price Rebound
The massive wave of short liquidations on Aug. 19 served as the primary catalyst for bitcoin’s rapid price rebound, according to blockchain analytics firm Glassnode. In its latest market report, Glassnode said the event recorded the single largest volume of single-day short liquidations in its data feed since tracking began in 2019.
During the squeeze window, short positions accounted for roughly 85% of all forced position closures across major centralized exchanges. The liquidation cascade began when bitcoin rapidly surged past key resistance levels, forcing bearish traders to cover their leveraged positions, Glassnode explained.
According to Glassnode’s liquidation heatmaps, an asymmetrical buildup of short leverage had been accumulating for up to 10 days before the breakout. As bitcoin broke upward, pending stop-loss orders and forced exchange closures acted as mechanical buy pressure, accelerating the rally toward the $80,000 threshold.
As previously detailed in Bitcoin.com News coverage, a violent short squeeze served as the primary engine for bitcoin’s more than $12,000 gain over a four-day window, with short liquidations outstripping longs by a staggering 4-to-1 margin in some cases. To illustrate, on Aug. 19, a massive $1.74 billion in bearish bets were forcibly unwound, dwarfing the $160 million in long liquidations. The relentless pressure on leveraged sellers persisted through Aug. 22, wiping out an additional $1.22 billion in short positions as cascading stop-losses continued to fuel the upward momentum.
Spot ETFs Sustained the Rally
While short liquidations initiated the initial spike, Glassnode highlighted that aggressive spot buying provided the secondary tailwind necessary to sustain higher price levels. According to the analysis, key market drivers reinforcing the rally include U.S. spot bitcoin exchange-traded funds, which recorded more than $2.2 billion in net inflows during the week following the squeeze, marking the strongest weekly intake of the year.
Glassnode also noted that all wallet-size cohorts, ranging from retail holders to large institutional entities, shifted into strong net accumulation, resulting in the most consistent buying trend observed since late 2024. Furthermore, wallet clusters associated with exchanges, custodians and ETF providers added more than 31,500 bitcoin during the rally window.
Despite the momentum, Glassnode warns that onchain metrics suggest bitcoin’s upward trajectory now faces a major structural test. Approximately 1.05 million bitcoin held by long-term holders currently sit in an overhead cost-basis shelf between $83,000 and $86,000.
Because this supply has been held through extended drawdowns, analysts expect this price band to test whether patient investors choose to sell near breakeven or hold for further gains. On the downside, short-term holder cost bases near $70,000 and the $62,000 to $65,000 support zone remain critical defense lines for market bulls.
Source: cryptonews.net