Bitcoin's record short squeeze and leverage washout may mark the next leg of the bull cycle

ChainThink said Aug. 26 that analysts at K33 and Bitwise see Bitcoin's latest record short squeeze and subsequent leverage reset as a potential signal that a new bull-market phase is starting. Bitcoin gained 23% over the past week, its strongest weekly advance since the November 2024 U.S. election. Activity surged across markets: spot and perpetual contract trading volume jumped 188%, CME volume rose 152%, and Bitcoin investment products recorded net inflows of 31,740 BTC. K33 Research Head Vetle Lunde highlighted that $1.37 billion in Bitcoin short positions were liquidated on Aug. 19, nearly twice the prior single-day record of $757 million set in July 2021. A further $739 million of shorts were liquidated on Aug. 21. After the flush, perpetual futures notional open interest fell to 284,000 BTC, the lowest since May, while funding rates moved back to neutral. Options positioning also shifted. Bitcoin's six-month 25-delta skew turned negative for the first time since September 2025, with call prices topping put prices, snapping an 11-month stretch in which traders paid a premium for downside protection. Technically, Bitcoin reclaimed its 50-day, 100-day, 200-day and 200-week moving averages within four days, faster than in any prior cycle. Similar moves have occurred only in October 2015, April 2020 and October 2023, periods that were close to the start of cyclical bull markets. Market participants are also watching Bessen's push to expand long-term U.S. Treasury repurchases as a potential additional catalyst. Bitcoin's 90-day correlation with gold has climbed to 0.52, the highest since October 2020, while its correlation with the Nasdaq has slipped to 0.38, a one-year low. Bitwise CIO Matt Hougan said that as the global financial system is increasingly used as a geopolitical tool, a neutral currency network—independent of any single country's banking system and capable of global transfer—could become more valuable.