The bitcoin rally triggered by the August 19 short squeeze halted at the $83,000–86,000 resistance zone, after which the price pulled back to $76,000 against the backdrop of renewed strength in US Treasury yields, according to the latest report from Glassnode.
The Rebound Hit a Dense Supply Zone
On August 19, the market experienced its largest wave of short position liquidations since 2019, which cleared a significant portion of leverage. The momentum pushed the price above $80,000 by August 27. However, above that level, bitcoin encountered dense selling pressure and reversed downwards to $76,000, triggering a series of long position liquidations.
The futures market liquidation heatmap shows a symmetrical structure around the current price:
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The upward impulse liquidated short positions but did not reach the dense cluster of short liquidations between $83,000 and $86,000;
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Below spot, a volume of long liquidations between $60,000 and $63,000 remains untouched.
The price is currently trading within this corridor.
The Overhang of Profitability Has Increased
Additional pressure on the recovery is created by the distribution of on-chain profitability. In May, when bitcoin traded around $78,000, approximately 65% of the supply was in profit. When the price returned to the same level in late August, the share had increased to 68%.
This shift is related to the summer accumulation of coins, which raised the cost basis of short-term holders to around $71,000. At the same nominal price, a larger volume of coins is now in profit—meaning that upon retesting previous highs, a larger reserve of potential selling supply forms.
Range Boundaries
Combining cost basis models with the distribution of coins among holders sets clear structural boundaries:
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Below — the dense accumulation zone of the summer consolidation between $62,000 and $65,000, acting as support;
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Above — the large supply volume from long-term holders between $83,000 and $86,000, capping the upside.
For now, the price remains squeezed between these levels.
Capital Inflows into ETFs Exist, But Activity Does Not
US spot bitcoin ETFs continued to see capital inflows throughout the rally: the seven-day average inflow increased to $290 million per day. However, secondary trading activity tells a different story—trading volumes held around $3 billion per day, noticeably lower than during previous market expansion phases. Capital inflows triggered by isolated news catalysts without sustained momentum often coincide with local reversals, after which the move rolls back.
Government Bond Yields Pull the Market Down
The macroeconomic backdrop quickly returned to a restrictive state. After the announcement of the US Treasury bond buyback program on August 19, the yield on ten-year notes temporarily fell to 4.6%. But over the next eight trading sessions, it returned to 4.8%, marking a new cycle high. Such a rapid reversal indicates that pressure from government debt remains the primary factor driving global discount rates.
During the initial impulse, bitcoin briefly decoupled from traditional equity markets, which were trading virtually flat at the time: the 30-day rolling correlation with the S&P 500 index fell towards zero. Historically, sharp decouplings against the backdrop of bond market sell-offs have been short-lived phenomena, marking local exhaustion of momentum rather than a structural regime change.
Options Cool Down After the Frenzy
Dynamics in the options market reflect the rapid shift in sentiment. The seven-day 25-delta skew spiked sharply during the short squeeze amid a chase for call options, then quickly returned to neutral values once resistance held the price. Meanwhile, the 180-day skew remained stable throughout the entire move—short-term frenzy has cooled, but structural demand for long-term optionality persists.
An additional factor for the market remains the quarterly options expiration on September 25—this accounts for about $14 billion in open interest on exchanges like Deribit and IBIT, with a significant portion of positions concentrated above $80,000. The approaching expiration creates a significant volatility and positioning anchor for the coming weeks.
AI Opinion
From the perspective of macroeconomic linkages, it's worth noting the Fed meeting calendar, which the author did not mention in the article. The Federal Reserve will hold its next FOMC meeting on September 16—exactly nine days before the quarterly $14 billion options expiration mentioned in the text. The rate decision will be announced at 9:00 PM Moscow time, and it has the potential to sharply shift the trajectory of ten-year bond yields, which are currently keeping bitcoin within its current corridor. The coincidence of two volatility catalysts within one week is rare for the crypto market: typically, options expirations and regulatory decisions are spaced out over time, allowing the market to digest each event separately. This time, participants will have to factor in two scenarios simultaneously in their positioning.
Whether we should expect increased amplitude of moves in mid-September, or if the market has already priced in both factors into the current consolidation, will be revealed in the coming couple of weeks.
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