Key Highlights
- Bitcoin gained roughly 26% from its mid-August low following a major short-liquidation event on August 19.
- About 85% of liquidations during the squeeze window came from short positions, according to Glassnode.
- U.S. spot Bitcoin ETFs recorded approximately $2.23 billion in net inflows during the seven-day recovery period.
Bitcoin (BTC) has recovered roughly 26% from its mid-August low, following a sharp derivatives-driven move on August 19, according to blockchain analytics firm Glassnode.
In a market report published on Wednesday, Glassnode said the recovery began with a large short-liquidation event before gaining further support from spot Bitcoin ETF inflows and changes in on-chain accumulation.
The firm now identifies the $81,000-$86,000 range as an important supply area, with several cost-basis, derivatives, and liquidation indicators concentrated around those levels.
August short squeeze cuts derivatives leverage
The August 19 move was initially driven by a large wave of short liquidations.
According to the data, the move produced the largest single-day short-liquidation event since 2019, with short positions accounting for approximately 85% of liquidations during the broader squeeze window.
The event also reduced leverage in the futures market. Futures open interest declined by around 11% in coin terms, while funding rates remained relatively close to neutral.
Glassnode’s liquidation figures cover major centralized exchanges but exclude Hyperliquid, so they do not represent the entire derivatives market.
The decline in open interest indicates that some leveraged positions were removed during the move, while relatively neutral funding rates suggest that the recovery was not accompanied by an equally large increase in long-side leverage.
Bitcoin ETF inflows add spot-market activity
Spot-market activity also increased during the recovery.
Glassnode recorded approximately $2.23 billion in net creations for U.S. spot Bitcoin ETFs during the seven-day squeeze window. The period included no days with net outflows, according to the firm.
Bitcoin also moved back above its short-term holder cost basis during the recovery.
The ETF figures show that the price move coincided with demand through spot investment products. They do not, however, establish that ETF buying was the direct cause of Bitcoin’s price increase.
Accumulation improves across wallet groups
Glassnode’s on-chain data showed broader accumulation across different wallet-size cohorts.
The firm’s 30-day Accumulation Trend Score remained at or above the neutral level of 0.5 across all six groups it tracks. Glassnode said this pattern had continued for roughly 20 days from August 5, marking its longest broad-accumulation period since late 2024.
The data also showed different behavior among larger wallet groups.
Entities holding between 1,000 and 10,000 BTC reduced their balances by approximately 50,500 BTC since the June 30 low. The largest cohort, which includes exchanges, custodians and ETF-related structures, absorbed roughly 59,100 BTC during the same period.
That largest cohort added around 31,500 BTC during the August squeeze window.
Glassnode cautioned that these wallet classifications can include several types of entities, meaning the movements cannot automatically be attributed to ETF purchases.
Bitcoin leads large-cap crypto assets
The recovery has also been concentrated among larger cryptocurrencies.
The report said large-cap crypto assets gained approximately 20.6% over the past month, while small-cap assets rose by roughly 6%. The difference indicates that the recent recovery has been stronger among more liquid assets, rather than being evenly distributed across the broader crypto market.
This does not establish whether capital will eventually move into smaller assets, but it shows that Bitcoin and other large-cap assets have led the recent move.
Bitcoin temporarily diverges from U.S. stocks
Bitcoin also moved independently of U.S. equities during the squeeze period.
Glassnode said Bitcoin gained about 25% during the window, while the S&P 500 fell approximately 1.7%. Its one-month rolling correlation with the index moved close to zero.
The change remains short-term. Glassnode noted that similar periods of divergence between Bitcoin and equities have reversed within weeks in previous market cycles.
As a result, the latest data shows a temporary reduction in correlation rather than evidence of a lasting shift in Bitcoin’s relationship with stocks.
$81K-$86K emerges as key supply zone
The next major test identified by Glassnode sits between $81,000 and $86,000.
The firm points to several indicators around this range, including long-term holder cost basis, sell-side liquidity, dealer positioning, and liquidation clusters.
An initial cost-basis level sits around $80,800, while dealer gamma positioning turns negative near $82,300. Additional liquidation-related supply extends toward approximately $86,000.
These levels indicate where existing positions could create additional supply if holders decide to sell into the recovery. Glassnode therefore identifies the range as an important area for determining whether the current move can continue.
$70K remains a key support level
On the downside, Glassnode places Bitcoin’s short-term holder cost basis at approximately $70,000. A deeper support area sits between $62,000 and $65,000, reflecting the cost basis of buyers who accumulated between June and August.
The firm also identified approximately $62,900, where the August squeeze originated, as an important reference point. A decline below these levels would change the current market structure identified by Glassnode, although the report does not present them as guaranteed price floors.
Options market shows wide expectations
Options positioning also points to a relatively broad range of possible outcomes. Glassnode said the two largest upcoming options expiries have max-pain levels around $69,000-$70,000.
For the September 25 expiry, the middle 70% of strike-implied outcomes range from approximately $69,000 to $89,700, with the median near the current market level. The positioning therefore does not provide a clear directional signal for Bitcoin. Instead, it reflects a wide range of market expectations around the next major expiry.
Bitcoin rally faces its next test
Bitcoin’s August recovery began with a major reduction in short-side leverage and was followed by strong spot ETF inflows and broader accumulation readings across wallet groups.
The market is now approaching a different test.
Glassnode’s $81,000-$86,000 supply zone contains several cost-basis and derivatives-related levels that could influence trading activity as Bitcoin moves higher. At the same time, $70,000 remains an important short-term holder cost basis on the downside.
The available data shows that Bitcoin’s market conditions have changed significantly from the August low, but it does not establish whether the recovery will continue.
The next stage will depend on how the market responds to the concentrated supply above and whether current demand is sufficient to absorb it.
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