Bitcoin pullback turns short squeeze into long squeeze

Bitcoin’s brief slide below $78,000 wiped out roughly $324.4 million across about 80,000 liquidated positions in 24 hours, with long positions accounting for the majority of losses and reversing last week’s short squeeze into a concentrated long squeeze.

Data from CoinGlass showed long traders absorbed about $270 million of the total liquidations. The largest single forced exit was an $11.91 million Bitcoin position on Binance. Bitcoin-specific long liquidations were near $109 million, while Ethereum longs accounted for roughly $70 million. XRP and Zcash long liquidations were about $16 million and $11 million, respectively.

Bitcoin traded as low as $77,870 before recovering above $79,000 at the time of reporting. The retreat affected major tokens: XRP fell about 4% to $1.43, Solana dropped roughly 3% to $97 after trading above $101, Ethereum traded near $2,467, Zcash declined about 7% to $789, and Cardano and Dogecoin each fell about 5%.

Market participants attributed the pullback primarily to profit-taking after a rapid rally that pushed Bitcoin above $80,000. The rally followed falling Treasury yields and sustained inflows into U.S. spot Bitcoin ETFs. Spot ETFs recorded more than $2.5 billion of inflows across a seven-session streak, lifting Bitcoin from roughly $62,000 earlier this month to above $80,000.

With many short positions forced out during the earlier advance, leverage rebuilt quickly on the long side. Market maker Wintermute noted that shorts accounted for most liquidations during the prior surge, and that the current fast repositioning resembled squeeze behavior. The firm added that once short covering fades, further gains will depend on fresh buyers willing to bid at higher prices.

Joao Wedson, chief executive of Alphractal, warned the probability of another long squeeze was rising because long positions had become more concentrated and funding rates remained positive on several exchanges. Positive funding means traders holding leveraged long positions pay short holders to keep those positions open; a rapid decline can force longs to close, adding selling pressure.

On-chain analytics showed rising demand alongside futures activity. CryptoQuant calculated total Bitcoin demand increased by about 170,000 BTC over the past 30 days. Glassnode reported monthly capital flows returned to positive territory and identified the short-term holder cost basis near $70,000 as a key level in any deeper pullback. At press time, Bitcoin remained above that short-term holder cost basis.

Several upcoming macro and market events could influence the next leg of price action. The U.S. Bureau of Economic Analysis was scheduled to release a revised estimate of second-quarter GDP along with July personal income and spending data, including the core PCE inflation gauge. Nvidia’s fiscal second-quarter results and outlook were set for the same week. Federal Reserve Chair Kevin Warsh was due to speak at the Jackson Hole Economic Policy Symposium later in the week. The Treasury’s expanded long-term buybacks were set to begin Sept. 9, with a planned CLARITY Act cloture vote on Sept. 15 and the Fed’s next policy decision on Sept. 16.

At the time of reporting, Bitcoin had recovered from Wednesday’s low and traded above $79,000. Market participants continued to monitor ETF and spot flows, funding rates, and upcoming macro releases for signs of whether liquidations would remain limited or widen.