Bitcoin rises 25% in August, $81,000 becomes key resistance

Author: 21shares

Compiled by Deep潮 TechFlow

Shenchao Overview: Bitcoin just posted its strongest August since 2017, rising approximately 25% for the month—but is this rally a trend reversal or a short squeeze? This report highlights key indicators that must be confirmed in September, offering valuable insights for both traders and long-term investors.

Key points:

• The catalyst arrived in August. Increased treasury buybacks drove Bitcoin up approximately 25%, marking its best monthly performance since November 2024, and coinciding precisely with historical windows marking the end of previous bear markets.
• The rally is supported. Record short liquidations fueled the momentum, but open interest remains only half of the October 2025 peak, funding rates are not overcrowded, and $3.05 billion in ETF inflows confirm genuine spot demand below.
• September will reveal the truth. Watch the support level between $76,000 and $78,000, the sustainability of ETF fund flows, and long-term yields. The $81,000 to $82,000 range is the key threshold distinguishing a trend reversal from a bear market rally. Any pullback should be viewed as a buying opportunity near the cycle’s end, not a reason to exit.

August was the month when the market stopped debating the bottom and began shifting into trading mode. The U.S. Treasury’s decision to at least double the scale of long-term Treasury buybacks was interpreted by the market as a quiet easing, greenlighting depreciation trades. Bitcoin rose nearly 12% within 24 hours and is up approximately 25% so far this month—the best performance since November 2024 and the strongest August since 2017. Equally significant as the magnitude of the rally is its timing: this surge occurred as the cycle clock had already entered the historical window in which previous bear market bottoms typically formed, and the bottoming signals we highlighted in our Bitcoin cycle indicators are now flashing.

In this report, we outline which levels must be defended, which trends must be followed, and what signals indicate a genuine exit from the bear market rather than a final squeeze.

1) Liquidity bears the primary responsibility

The Treasury has raised the upper limit for each liquidity support operation in the 10- to 30-year Treasury sector to at least $4 billion. The market’s initial reaction was textbook: the 30-year yield, which had just touched a 19-year high the previous day, dropped 10 basis points, the dollar weakened, and both gold and bitcoin rose in tandem—a classic signature of a depreciation trade. But the bond market’s truce lasted less than a trading day: long-term yields quickly rebounded, erasing all of the relief from the announcement within a single day, forcing the Treasury to escalate further. Bessent first signaled an intention to exceed $4 billion in operation size, then went further, proposing to use approximately $1 trillion in funds from the Treasury General Account (TGA) as a much larger repurchase channel. This series of moves indicates that investors doubt the government’s ability to control its own borrowing costs—and as a result, this episode may mark the beginning of a new mechanism, not merely a one-off event. Interest payments now exceed 20% of federal tax revenues (Congressional Budget Office, 2026 baseline projection), reflecting the operation of the “fiscal dominance and scarce assets” logic: pressure is falling on cash and bonds. Bitcoin, gold, and silver have historically benefited from such environments.

2) Washington adds further fuel to the crypto market

Within just one week, the U.S. Securities and Exchange Commission (SEC) proposed the "Crypto Asset Regulatory Framework" (allowing token offerings of up to $75 million annually without full registration), President Trump met with crypto industry executives alongside the chairs of the SEC and the Commodity Futures Trading Commission (CFTC), urging the Senate to pass the CLARITY Act before the September 15 vote, and stated that the CFTC is bringing Hyperliquid into the U.S. regulatory framework in full compliance with the law.

3) Market positioning and capital flows amplified the gains

Approximately $1.4 billion in BTC short positions were liquidated, one of the largest short squeezes in crypto history. U.S. spot Bitcoin ETFs attracted over $3.05 billion in August, the strongest monthly inflow since October 2025, with about $1 billion absorbed in the first two weeks. Investor sentiment shifted from fear to greed in less than a month—the most dramatic reversal this year. The rally was broad-based: ETH reclaimed the $2,000 level and traded in a range near $2,400–$2,500; SOL surged from just above $70, where it had been consolidating for over a month, to $110; boosted by CFTC remarks, Hyperliquid jumped approximately 25%.

Trend structure: Repaired, but currently facing a barrier

Bitcoin is currently significantly above both the 50-day and 200-day moving averages, trading approximately 20% and 46% above these long-term reference levels respectively: one being the 200-week moving average near $65,500, and the other being the average investor cost basis, or realized price, at $53,000. The price is now advancing toward the 50-week moving average near $81,000—a level that previously acted as strong resistance earlier this year, repeatedly rejecting price and pushing it back down to lows around $57,000–$58,000. $82,500 also represents the cost basis for U.S. Bitcoin ETF holders, which is critical: if ETF holders maintain their positions above this level, it signals the broader market’s bullish sentiment. Multiple factors converge to make this the most significant single resistance level on the chart. Whether the price can close above it on a weekly basis will determine whether this is a true trend reversal or merely a bear market rally. After reaching approximately $81,500, the price has since consolidated between $77,000 and $79,000.

Momentum: Strong, but avoid chasing highs when overheated

Bitcoin’s Relative Strength Index (RSI), a momentum indicator measuring overbought or oversold conditions on a 0 to 100 scale, rose to over 80 last week—the highest reading this year. Extreme RSI levels often reflect the initial momentum when markets break out of a range, with prices typically consolidating to absorb that move. This suggests the easiest portion of the rally is over: buying here means paying at the top of the range, just below the $81,000 to $82,000 resistance. A better entry point would be to wait for a pullback to the support zone of $76,000 to $78,000, rather than chasing price at elevated levels.

The immediate support is the breakout range of $76,000 to $78,000.

After serving as a key resistance level throughout the summer, this range has now shifted to support. Maintaining this level keeps the breakout pattern intact. Below it lies $68,500 (the short-term holder cost basis, used to distinguish recent buyers in profit or loss), followed by $65,000, and then the 200-week moving average at $60,000. Above, the $81,000 to $82,000 zone must be breached; once cleared, the path opens to $85,000, and beyond that, the year’s high of $98,000 re-enters the conversation.

Derivatives: Warm, but not overheated

The perpetual contract funding rate is currently around 10% annualized—positive, but significantly lower than levels commonly seen during periods of excessive long positioning. The futures open interest tells the same story: currently at approximately $54 billion, it has recovered from its yearly low amid the price rise, yet remains 23% below last year’s bull market peak of $70 billion and sits at the lower end of this year’s range. Enthusiasm is slowly returning, which is a positive signal. Since the breakout, Bitcoin’s upward movement has been driven primarily by spot demand rather than leverage, leaving room for further upside without the fragile, overcrowded positions characteristic of the previous cycle’s peak. What the market needs next is sustained spot demand, and a more balanced derivatives structure is precisely the foundation we hope will support future growth.

Breadth: High-quality assets are leading the rally—this is what a sustainable shift looks like.

The ETH/BTC exchange rate, a metric measuring Ethereum's performance relative to Bitcoin, has risen above 0.03 for the first time in four months. This level is significant: it long served as a floor for this ratio, dropping to 0.024 during the spring sell-off, then reclaimed in mid-June, signaling that sellers could no longer suppress it. Since then, ETH has broken above the area where its April rebound failed, while SOL’s rise has coincided with improved on-chain activity. Capital rotating into the strongest major cryptocurrencies is how a recovery begins—not how a bear market rally ends.

The tug-of-war between the Federal Reserve and the Treasury

The core contradiction lies in the fact that the two arms of U.S. policy are pulling in opposite directions: once the Treasury’s expanded repurchase program begins, it starts easing long-end rates, while the Federal Open Market Committee (FOMC) continues to discuss rate hikes. With core PCE slightly above expectations and Fed Chair Kevin Warsh’s keynote speech at the Jackson Hole Economic Symposium on August 28 proving more hawkish than anticipated, traders are currently pricing in a 65% probability of a rate hike at the September FOMC meeting. However, the Fed’s hawkish stance cannot offset the growing deficit and increasing skepticism about its independence—factors that appear to be driving markets to reprice depreciation trades. The scoreboard for this contest is the 30-year yield following the launch of the repurchase operations.

September 15: CLARITY Act vote

Polymarket currently assigns a roughly 13% probability to passage this year, meaning failure is already well-priced; passage would be an upside surprise. The 2024 election serves as the template: the moment a binary catalyst drives the fastest price movement is when the odds shift, not when the outcome is finalized. Regardless of the outcome, the rulemaking pathways of the SEC and CFTC are progressing in parallel as a fallback option, though they cannot replace legislation.

Sustained ETF inflows alongside potential profit-taking

On August 30, $500 million in ETF inflows occurred while Bitcoin was approximately 35% below its all-time high, indicating that investors were deploying capital at a significant discount rather than chasing prices at peaks. The reverse dynamic is also at play: after a 25% rally over the past month, the breakeven price for short-term holders has risen rapidly and is now nearing the current price, with the market trading just above the 200-day moving average and the breakout range. This is precisely the zone where investors lacking long-term conviction tend to take profits—and this is already happening: since the breakout, short-term holders have been transferring over $500 million in profit-taking BTC to exchanges daily, roughly four times the pace seen earlier in August and the heaviest profit-taking since December last year. September’s flow data will reveal which force prevails: if ETF demand continues to absorb these profit-taking waves, the pullback will be shallow; if sentiment shifts and demand fades, a deeper downward correction may arrive sooner.

On-chain activity rebounds

This rally is not just about macro trends and positioning—it is supported by genuine increases in network usage, with fundamental catalysts emerging across multiple blockchains that align with price movements.

Ethereum's valuation has finally caught up with its fundamentals.

ETH has reclaimed the $2,000 level, and the ETH/BTC exchange rate has also risen back above 0.03 after hitting a low in mid-June. The confirmation level is near $2,450—the area where the April rebound failed—where ETH is currently trading. A key pattern to remember is that ETH often consolidates for months before experiencing a sharp, concentrated surge, as seen during the summers of 2024 and 2025; tactically, it is the asset with the most explosive upside when market sentiment shifts. Underlying fundamentals support this rally: as we analyzed in our Ethereum Q1 2026 earnings breakdown, despite a 69% year-over-year decline in fee revenue amid waning speculation, usage continues to accumulate. Monthly active addresses rose 15% year-over-year to 8.4 million, smart contract deployments increased 74% to over 1.3 million, Ethereum-based stablecoins grew 22% to approximately $156 billion, and Ethereum now holds 47% of the $34 billion tokenized real-world assets market. Although accounting for only 32% of total altcoin market cap, the network commands 54% of the entire crypto ecosystem’s total value locked (TVL)—its economic weight significantly outpaces its valuation. Institutions are positioning around this gap: two institutional initiatives launched in July to onboard large investors into Ethereum’s infrastructure; since July, adjusted for market cap, ETH ETF inflows have surpassed those of Bitcoin (Bloomberg, August 2026).

Solana's governance creates scarcity as activity reaches new highs.

The network recorded its strongest week of DEX activity in over six months—DEXs being platforms where traders can directly exchange crypto assets without centralized intermediaries—with weekly spot DEX volume surpassing $20 billion, signaling a return of market activity. It also set a new all-time high for weekly transaction count: 1.17 billion transactions in the second week of August, approximately 20% higher than the volume during the launch week of Trump Coin. Among all blockchains, Solana currently accounts for 40% of spot DEX volume, a year-over-year increase of about 30%, as discussed in our recent Solana H1 2026 Profitability Analysis. On the governance front, SIMD-550 was approved in the form of SGP-002, a proposal that will halve the network’s annual inflation rate and bring Solana’s terminal inflation rate to 1.5% by 2029—approximately three years ahead of the original schedule. The short-term cost is a reduction in staking yields; however, similar supply-reduction upgrades on other chains have historically been viewed as positive supply signals. This cut is intentionally designed to redirect capital away from staking and toward Solana’s on-chain economy, where activity is already rebounding. Our full analysis of the Solana SIMD-550 governance proposal provides a detailed breakdown of these trade-offs.

Hyperliquid's biggest revenue catalyst has yet to arrive.

The world’s largest decentralized perpetuals exchange has made headlines as the CFTC moves to bring it under U.S. regulatory oversight, but fundamental shifts are also unfolding beneath the news. In the third week of August, it recorded its highest weekly revenue since the week Bitcoin hit its all-time high in October last year, generating over $24 million—surpassing the combined revenue of the next three largest perpetuals exchanges over the prior two months. The chain is also on track for its busiest month since October 2025, with August trading volume nearing the midpoint of the $200 billion range. Looking ahead, even larger catalysts may lie ahead. As discussed in our recent Hyperliquid H1 2026 profitability analysis, pursuant to the agreement reached in May with Circle and Coinbase, approximately 90% of the treasury yield generated by the over $5.4 billion in USDC held on Hyperliquid will be allocated to the protocol for HYPE buybacks. Based on our estimates, this could generate annualized revenue of $135 million to $160 million—nearly 18% of current core income (this is a projection based on current conditions; actual results may vary). The first payment is expected to arrive in early October.

Cycle clock: If it weakens, it will signal the final stage of a bear market.

We are now approximately ten months removed from the October 2025 peak, firmly within the historical window for Bitcoin to complete its base formation. Indicators of a bottom have been signaling for several weeks: the Market Value to Realized Value (MVRV) ratio—which measures Bitcoin’s current price against the average price at which all coins were last moved, helping to assess whether the market is over- or undervalued—has approached levels seen at previous cycle bottoms. Simultaneously, signs of seller exhaustion are emerging on-chain, as the percentage of investors in profit declines while large holders continue accumulating. This convergence last occurred near the bottoms of 2020 and 2022. These signals do not rule out further downside; rather, they tell us what such a decline would likely signify. If a bear market scenario unfolds, we would interpret it as a final cyclical retracement near the bear market’s end—not the beginning of a prolonged downturn.

Bull market scenario: Sufficient momentum follows

The conditions are straightforward: Bitcoin holds the $76,000 to $78,000 support zone, the Fed maintains a neutral tone with rates unchanged or cut, the Treasury’s buyback program launches smoothly, and ETF inflows continue into September. Each factor alone keeps the liquidity narrative intact; together, they give the market confidence to break above $81,000 to $82,000. Once above this level, the path to $85,000 opens quickly, making a Q4 retest of the year’s high at $98,000 possible.

The CLARITY bill vote adds another layer of possibility: since the probability of passage is priced at only around 13%, failure is already expected, while an unexpected passage would serve as an additional catalyst. The key point is that this is exactly how a bear market should end—catalysts emerging within the historical bottoming window, the long-term anchor level reclaimed, and investors已完成建仓. Ongoing follow-through will confirm that the bear market, which began in October 2025, concluded within this window, and as liquidity gradually rotates into mainstream cryptocurrencies with the strongest fundamentals, the breadth of the rally will expand.

Bear market scenario: Market stagnation

A significant portion of this August rally was driven by positioning: the upward move was amplified by one of the largest short squeezes in crypto history, a squeeze fueled by buying borrowed from the future. If this is the main narrative, the market is now flooded with a new cohort of longs holding rapid paper profits—exactly the kind of structure where profit-taking can snowball. Add any negative catalyst—such as a rate hike at the September FOMC meeting, rising long-term yields despite repurchases, renewed geopolitical uncertainty in the Middle East, or a depletion of ETF inflows after sentiment turns greedy—and the downside path becomes clear. A break below the $76,000–$78,000 range for Bitcoin would trigger cascading selling down to the short-term holder cost basis at $68,500; if that level falls too, attention shifts to $65,000 and then to $60,000—the zone of the 200-week moving average and realized price. Under this scenario, August would be remembered as a bear market rally, not an immediate end to the bear market. But it’s crucial to note the other side of this picture: the cycle clock has sunk so deeply into a bottoming window, and bottoming signals have already flashed, meaning even in a bearish scenario, this describes the final act of this bear market—not the beginning of a new downtrend.

For most of this year, our assessment remained in the “future tense”: signals clustered at the bottom, waiting for a catalyst. August moved it into the “present tense.” The catalyst is now in place, the long-term anchor has been reclaimed, and the market has absorbed massive liquidations of short positions without breaking structure. The timing of this rally is as significant as its magnitude. We are within the historical window during which every prior Bitcoin bear market has completed its base formation. Two scenarios ultimately lead to the same outcome, differing only in path and pace. This is why we view any subsequent pullbacks as cyclical end-stage retracements worth buying—not reasons to exit.

From here, we focus on three key factors in sequence: whether Bitcoin can hold the $76,000 to $78,000 range during any pullbacks; whether ETF inflows can sustain momentum after a shift in sentiment; and whether long-term yields remain under control after buybacks begin. If all three hold true, a breakout to $81,000–$82,000 is merely a matter of time. For investors building long-term Bitcoin positions, previous cycles have shown that these levels historically represent meaningful entry points—but past cycles do not guarantee future results, and Bitcoin remains a highly volatile asset.

Why did Bitcoin rise in August 2026?

Bitcoin rose approximately 25% in August 2026, driven by three factors: the U.S. Treasury’s decision to double the scale of its long-term bond buyback operations (interpreted by markets as a signal that scarce assets like Bitcoin would benefit), Washington’s accelerated push on cryptocurrency policy initiatives (including the SEC’s proposed regulatory framework and CFTC’s outreach to Hyperliquid), and a massive short squeeze that liquidated around $1.4 billion in leveraged positions betting against Bitcoin.

Is $81,000 a key resistance level for Bitcoin?

Yes. As of the end of August 2026, the $81,000 to $82,000 range is the most significant resistance level on the chart. Bitcoin’s 50-week moving average is located here; earlier this year, this level rejected Bitcoin’s rally, pushing it back down to the $57,000 to $58,000 range. It also closely aligns with the cost basis of U.S. Bitcoin ETF holders. A sustained weekly close above this range would signal a trend reversal, rather than just a bear market rally.

What is the CLARITY Act, and why is it important for the crypto market?

The CLARITY Act is U.S. legislation aimed at establishing a clearer regulatory framework for digital assets, with a procedural vote in the Senate scheduled for September 15, 2026. The probability of passage this year, according to prediction markets, is approximately 13%, making failure the baseline scenario and already fully priced in. If it unexpectedly passes, it would serve as an catalyst for crypto prices not yet reflected in valuations; even if it fails, the SEC and CFTC are concurrently advancing rulemaking, which could yield similar outcomes over a longer timeline.

What does the inflow of funds into Bitcoin ETFs indicate?

U.S. spot Bitcoin ETFs attracted over $3.05 billion in August 2026, the strongest monthly inflow since October 2025. Notably, this inflow occurred while Bitcoin was approximately 35% below its all-time high, indicating that investors were building positions at a discount rather than chasing prices at peaks. The key question for September is: Will this inflow momentum continue after sentiment shifts from fear to greed, or will profit-taking by short-term holders outpace new demand?

What will the bear market scenario for Bitcoin look like from now on?

The bearish scenario suggests that August’s rally was primarily driven by short squeezes rather than new spot demand. If the September Fed meeting turns hawkish, long-term yields rise, or ETF inflows dwindle and reverse momentum, Bitcoin could break below the $76,000–$78,000 support zone, potentially declining to $68,500, then $65,000, and in extreme cases, even $60,000. However, even under this scenario, given how deeply we are already within a historical bottoming window, this would represent a pullback near the cycle’s end—not the beginning of a new sustained downtrend.