Bitcoin rallied sharply from the mid-$63,000 range in mid-August to almost $79,000 by August 24, marking a swift and significant price recovery. As Bitcoin approached resistance near $80,000, market observers noted that open interest, particularly in coin terms, declined despite the strong upward movement.
Leverage drops as spot demand rises
Data from blockchain analytics firm Santiment showed that open interest measured in BTC fell 11% to approximately 312,600 BTC, the lowest level in a month. This decline took place even as Bitcoin moved to multi-week highs.
Santiment pointed out that Bitcoin gained around 22% in price from an average of $63,500 to $77,700, but coin-denominated open interest dropped from nearly 353,500 BTC.
However, dollar-denominated open interest rose around 8% as a result of Bitcoin’s increased value. The relative decrease in leverage suggests the recent advance was not led by excessive risk taking in derivatives markets.
CryptoQuant, another digital asset analytics firm, highlighted that fresh capital flowed into Bitcoin without a proportional rise in leveraged positions, implying greater support from spot buyers. According to its analysts, market upswings driven by genuine buying rather than borrowed funds tend to be more sustainable.
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AAPLGlassnode, which monitors on-chain flows, reported that U.S. spot Bitcoin ETFs saw nearly $1 billion in net inflows across three days. This marked the largest inflow over such a period since Bitcoin last traded above $80,000.
ETF participation contributed to the strong rebound, indicating institutional buyers are more active through regulated funds, while the derivatives market remained relatively subdued in terms of leverage.
| Metric | Before Rally (Aug 12–18) | After Rally (Aug 23–24) |
|---|---|---|
| BTC Price (average) | $63,500 | $77,700 |
| Open Interest (BTC) | 353,500 BTC | 312,600 BTC |
| Spot ETF Inflows (3 days) | Less than $1 billion | Nearly $1 billion |
Short liquidations and resistance ahead
Anthony Pompliano, a well-known cryptocurrency investor, stated that a major short squeeze contributed to the latest surge. As Bitcoin’s price accelerated, traders holding bearish positions were forced to exit quickly, amplifying buying activity as resistance levels were cleared.
Rekt Capital, a technical analyst, stressed caution as Bitcoin neared the upper end of its longstanding $60,000–$80,000 price band. He observed that previous bullish rallies during bear markets often retraced in the weeks that followed, underscoring the importance of upcoming price action in determining the market’s next direction.
Rekt Capital underscored that after similar strong rallies in the past, Bitcoin frequently experienced sharp downturns in the week that followed, making the coming sessions critical for assessing whether these gains can be maintained.
Recent price momentum is being driven by a combination of forced short liquidations and genuine spot buying. The reduction in coin-based open interest, substantial ETF inflows, and lack of overheating in the derivatives market indicate that the current rally is not primarily fueled by high leverage.
The key test now is whether demand remains robust enough to support Bitcoin above the $80,000 threshold. If buying pressure persists, the move could signal lasting strength. However, a drop in inflows or renewed selling could trigger a deeper market correction.
Mini dictionary: Glassnode is an analytics platform providing on-chain and market intelligence for digital assets, frequently cited for its data insights on cryptocurrency flows and investor behavior.
