Record Short Squeeze Drives Bitcoin Rally, but $83K Resistance Looms

Record Squeeze Triggers Price Rebound

The massive wave of short liquidations on Aug. 19 was the main catalyst for bitcoin’s rapid price rebound, according to blockchain analytics firm Glassnode. In its latest market report, Glassnode said the event marked the largest single-day volume of 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. Glassnode said the liquidation cascade began when bitcoin surged through key resistance levels, forcing bearish traders to close leveraged positions.

The firm said its liquidation heatmaps showed an asymmetric buildup of short leverage that had been forming for as long as 10 days before the breakout. As bitcoin moved higher, pending stop-loss orders and forced exchange closures created mechanical buy pressure, helping accelerate the rally toward the $80,000 threshold.

As previously detailed in Bitcoin.com News coverage, the short squeeze was the main engine behind bitcoin’s more than $12,000 gain over a four-day period, with short liquidations at times exceeding long liquidations by 4-to-1. On Aug. 19, $1.74 billion in bearish bets were forcibly unwound, compared with $160 million in long liquidations. The pressure on leveraged sellers continued through Aug. 22, when another $1.22 billion in short positions was wiped out as cascading stop-losses kept fueling the advance.

Spot ETFs Sustained the Rally

While liquidations drove the initial spike, Glassnode said aggressive spot buying provided the additional support needed to keep prices elevated. One of the main drivers cited in the analysis was U.S. spot bitcoin exchange-traded funds, which recorded more than $2.2 billion in net inflows in the week after the squeeze, their strongest weekly intake of the year.

Glassnode also said every wallet-size cohort, from retail holders to large institutional entities, moved into strong net accumulation, producing the most consistent buying trend seen since late 2024. In addition, wallet clusters associated with exchanges, custodians and ETF providers added more than 31,500 bitcoin during the rally window.

That combination of forced covering and sustained spot demand matters because it shows the move was not driven by a single market segment alone. It also places attention on how much fresh buying can remain in the market if bitcoin revisits the higher price bands where long-term holders previously acquired coins.

Despite the momentum, Glassnode said onchain data now points to a major structural test for bitcoin’s upward move. About 1.05 million bitcoin held by long-term holders are sitting in an overhead cost-basis shelf between $83,000 and $86,000.

Because this supply has been held through extended drawdowns, that range could become an important area to watch for distribution as well as continued holding. On the downside, short-term holder cost bases near $70,000 and the $62,000 to $65,000 support zone remain important defense levels for market bulls.