Invest1 publisher2 min readPublished
Shorts supplied 89 cents of every liquidated dollar in Bitcoin's 24.6% August run
A Glassnode and Bybit report with data through August 23 found coin-denominated open interest fell 12.6% as Bitcoin rose 24.6%, and the same short squeeze repeated this week when the Fed paired a hike with a dovish forecast.
The Investor · Invest desk
What happened
- Bitcoin rose 24.6% over five days in August while coin-denominated open interest, a measure of active leverage, fell 12.6%, according to a joint report from Glassnode and the exchange Bybit.
- Short positions supplied 89% of every liquidated dollar over those five days, with the report attributing the move to forced unwinding of existing bearish bets.
- Bitcoin climbed back above $80,000 this week after the Federal Reserve paired its first rate hike since 2023 with a dovish forecast, setting off another squeeze.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- constraint Dollar-denominated open interest rose about 8.9% across the same five days, so the USD series that most dashboards publish cannot separate new longs arriving from old shorts being closed.
- exposure Short sellers are the ones who pay when the Fed surprises dovish: one session this week cost them more than $230 million in Bitcoin positions alone.
- decision A long entered on the strength of August is a wager that the short book rebuilds and gets cleared again, since the report attributes the gain to unwinding.
The price gained 24.6% over the five days while coin-denominated open interest fell 12.6%. That leaves the dollar value of that open interest roughly 8.9% higher at the end than at the start [1][9]. Anyone watching the USD series alone would have read that as fresh leverage arriving.
The composition of the forced selling is the evidence. Shorts supplied 89 cents of every liquidated dollar across the stretch, against roughly 64,000 BTC of open interest closed out [3][2]. Puts had priced richer than calls for 361 consecutive days until one session ended the run [4]. Bybit's own volatility index traveled four times its normal daily range in that session [5].
The front of the futures curve repriced sharply while longer-dated contracts barely moved, which Glassnode and Bybit take as the market pricing an event it expects to pass [6].
The pattern repeated this week. Bitcoin went back above $80,000 after the Federal Reserve paired its first rate hike since 2023 with a dovish forecast [10]. The squeeze that followed took out more than $230 million of Bitcoin shorts and over $445 million across the market in one session [11]. CoinGlass counted roughly $529 million of liquidations over 24 hours, the majority again from shorts [12]. Bitcoin shorts alone were about 43% of that 24-hour total [13].
One reading is that a crowded short book got cleared and positioning explains the whole move. The 89% figure supports it, and so does the report, which describes the rally as running on the unwinding of existing shorts [3][8]. The second reading is that ending a year of put richness in a single session lowers the cost of carrying a long. Cheaper downside cover pulls in buyers who would not pay last year's premium [4]. In my view the first is better supported, for the plain reason that the long end of the curve did not move [6].
One limit on all of it: Glassnode's options coverage spans four crypto-native venues and excludes CME, so the figures describe the crypto-native market, and the data stops at the settled close of August 23 [7].
What to watch
- Whether 25-delta skew stays call-bid and the front of the futures curve holds firm, which the report's authors set as the marker of a durable repricing.
- Whether put premium returns while funding fades, the authors' signature of an event the market absorbed.
- CME positioning, which Glassnode's four-venue options coverage excludes, and which would either confirm or contradict the crypto-native picture.