Bitcoin’s $80,000 rally shifts from short squeeze to long squeeze

Bitcoin briefly slipped below $78,000, triggering more than $300 million in crypto liquidations as traders took profits after a rapid climb to $80,000. The pullback marked a reversal from last week’s short‑squeeze‑driven rally to a new phase where leveraged long positions are being liquidated.

Market reaction across major assets

During the 24‑hour window Bitcoin fell to $77,870 before recovering above $79,000. The decline spread to other coins:

• XRP down 4% to $1.43
• Solana down 3% to $97 (previously above $101)
• Ethereum slipped to about $2,467
• Zcash fell 7% to $789
• Cardano and Dogecoin each dropped roughly 5%, with ADA near $0.20

Liquidation dynamics

CoinGlass data recorded roughly 80,000 liquidations in the past day, amounting to $324.4 million in losses. Long positions accounted for about $270 million of that total, a sharp contrast to the previous week when short positions dominated liquidations.

The largest single liquidation was an $11.91 million Bitcoin long on Binance. Bitcoin longs lost about $109 million, while Ethereum longs lost roughly $70 million. Long liquidations also hit XRP ($16 million) and Zcash ($11 million).

Shift in leverage composition

Market maker Wintermute noted that short traders represented roughly 92% of liquidations during the prior advance, when Bitcoin broke out of its trading range and attracted $2.6 billion in crypto investment product inflows. The rapid swing to long‑side liquidations suggests leverage rebuilt quickly on the bullish side.

Alphractal’s CEO Joao Wedson warned that the probability of a “long squeeze” is rising as long positions become more concentrated and funding rates stay positive across several exchanges. Positive funding indicates leveraged longs are paying shorts, a sign of bullish futures market sentiment, but also creates risk of rapid unwind if prices fall.

ETF and spot demand under pressure

US spot Bitcoin ETFs have drawn more than $2.5 billion over a seven‑session inflow streak, helping lift Bitcoin from the low $60,000s to above $80,000. Wintermute said continued ETF inflows are now crucial for confirming the rally’s durability. A negative weekly ETF flow combined with a Bitcoin close below $67,000 would likely trigger caution.

CryptoQuant data shows spot and futures demand have risen together, with about 170,000 BTC added in the past 30 days. Glassnode reports monthly capital flows back in positive territory and notes that the short‑term holder cost basis sits near $70,000, a key support level.

Macro backdrop

The pullback coincides with upcoming macro events: U.S. GDP and personal income data, the PCE inflation gauge, Nvidia’s earnings, and Federal Reserve Chair Kevin Warsh’s remarks at the Jackson Hole symposium. These releases could influence Treasury yields and risk appetite, which have been central to Bitcoin’s recent moves.

Looking ahead, the market will watch whether the dip below $80,000 merely clears excess leverage or signals a broader unwind. Continued buying above key support levels will be essential for sustaining the rally.