Huoxing Finance reports that on August 26, analysts from K33 and Bitwise stated that Bitcoin’s record-breaking short squeeze, leverage reset, and macro catalysts brought by U.S. Treasury Secretary Bentsen may signal a broader market shift toward a bull market reset. Bitcoin rose 23% over the past week, marking its strongest weekly performance since the November 2024 U.S. election rally; spot and perpetual contract trading volumes increased by 188%, CME volumes rose 152%, and Bitcoin investment products saw net inflows of 31,740 BTC. K33 Research Director Vetle Lunde noted that on August 19, $1.37 billion in Bitcoin shorts were liquidated—nearly double the previous single-day record of $757 million set in July 2021—followed by another $739 million in shorts liquidated on August 21. Since then, the notional open interest in perpetual contracts has dropped to 284,000 BTC, the lowest since May, and funding rates have returned to neutral. Historically, large-scale short squeezes typically occur during Bitcoin’s bottoming phases. Other indicators are also shifting in tandem. The six-month 25 Delta options skew for Bitcoin turned negative for the first time since September 2025, indicating that call options are priced higher than put options—ending an 11-month period during which the market paid a premium for downside protection. Bitcoin has also reclaimed its 50-day, 100-day, 200-day, and 200-week moving averages within four days—faster than in any prior cycle. In the past, such a recovery within 45 days occurred only in October 2015, April 2020, and October 2023—all near the onset of cyclical bull markets. Bentsen’s push to increase long-term U.S. Treasury repurchase operations is also viewed as an additional catalyst. Bitcoin’s 90-day correlation with gold has risen to 0.52, the highest since October 2020, while its correlation with the Nasdaq has fallen to 0.38, a one-year low. Bitwise Chief Investment Officer Matt Hougan believes that as the global financial system becomes increasingly used as a geopolitical tool, a neutral monetary network independent of any single nation’s banking system and capable of global transfer will become more valuable.
Bitcoin’s Record Short Squeeze and Leverage Reset Signal Potential Bull Market Restart
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Summary
Bitcoin news highlights a record short squeeze and leverage reset, with $1.37 billion in short positions liquidated on August 19—nearly double the 2021 record. Bitcoin rose 23% in a week, its strongest weekly gain since November 2024. Funding rates have returned to neutral, and the Fear & Greed Index indicates shifting market sentiment. Open interest fell to 284,000 BTC, the lowest since May. Bitcoin reclaimed key moving averages within four days—a pattern often observed prior to the start of a bull market.
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