- Bitcoin gained 23% over the past week, its strongest weekly performance since November 2024.
- A record $1.37 billion in Bitcoin shorts were liquidated on Aug. 19, helping flush bearish leverage from the market.
- K33 and Bitwise say improving technical, derivatives and macro conditions could signal a broader bull-market reset.
Bitcoin’s historic short squeeze may be turning into something larger, with analysts at K33 and Bitwise pointing to several signs that the market could be transitioning out of months of weakness.
Bitcoin gained 23% over the past week as spot and perpetual futures volumes surged 188%. Bitcoin investment products also attracted 31,740 BTC in net inflows, their strongest week since the October 2025 highs.
Record Short Squeeze Flushes Leverage
A record $1.37 billion in Bitcoin shorts were liquidated on Aug. 19, nearly double the previous daily record of $757 million set in July 2021. Another $739 million in shorts were liquidated on Aug. 21.
The squeeze pushed perpetual futures open interest down to 284,000 BTC, its lowest level since May, while funding rates returned to neutral.
K33’s Vetle Lunde noted that major short squeezes have historically appeared around Bitcoin bottoming periods when bearish positioning becomes overcrowded.
Bitcoin Flashes Bullish Reversal Signals
Bitcoin’s six-month options skew has also turned negative for the first time since September 2025, meaning calls are now more expensive than puts after nearly a year of stronger demand for downside protection.
Bitcoin also reclaimed its 50-day, 100-day, 200-day and 200-week moving averages in just four days — faster than in any previous cycle.
According to K33, previous periods when Bitcoin reclaimed all four averages within 45 days occurred in October 2015, April 2020 and October 2023, around the beginning of major cyclical bull markets.
Bessent Adds a Macro Catalyst
Treasury Secretary Scott Bessent‘s push to expand long-term Treasury buybacks has added another potential catalyst by signaling greater intervention in bond markets.
Bitcoin’s 90-day correlation with gold has climbed to 0.52, its highest since October 2020, while its correlation with the Nasdaq has fallen to a one-year low of 0.38.
Bitwise CIO Matt Hougan also pointed to Bessent’s planned economic pressure against Iran’s global financial connections. He argued that greater use of the financial system as a geopolitical tool could strengthen the case for neutral, globally transferable assets such as Bitcoin.
With leverage flushed, ETF demand returning and several long-term technical signals improving, analysts see growing evidence that Bitcoin’s latest rally could represent more than another short-lived squeeze.
