The short squeeze sparked the rebound, but ETF and on-chain data suggest broader demand is now helping.
Bitcoin (BTC) has risen about 26% from its mid-August low after a short-liquidation event accelerated the rebound. Glassnode said the August 19 move produced the largest one-day liquidation event since 2019.
Short positions accounted for most of the liquidations across the major centralized exchanges. The actual total was likely higher because the dataset excludes Hyperliquid.
ETF Demand and Large Holders Add Support
The squeeze cleared much of the liquidation liquidity around Bitcoin. Glassnode now sees short-liquidation levels above the market and a smaller pool of long-liquidation levels below.
The rebound was not driven only by forced closures, as spot demand also supported the move. US spot Bitcoin ETFs recorded $2.23 billion of net inflows over seven days, with no outflow days and their strongest weekly intake of 2026. The period included the largest ETF creation session since mid-January.
Meanwhile, Bitcoin continued moving away from exchanges as wallet groups changed their holdings. Entities holding between 1,000 and 10,000 BTC reduced their balances by 50,500 BTC since June 30.
In contrast, entities holding more than 100,000 BTC added 59,100 BTC. This group includes exchanges, custodians and ETF-related wallets.
During the squeeze week, the custody group added 31,500 BTC. Glassnode said the amount was similar in scale to weekly ETF creations, but the data does not show that the same coins moved directly into ETFs.
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Every wallet-size cohort also moved into net accumulation on Glassnode’s 30-day trend score. The firm called it the most persistent all-cohort buying since late 2024.
Bitcoin Now Faces a Tougher Test
Leverage has not returned at the same pace as Bitcoin’s price, with futures open interest falling 11% in BTC terms. Perpetual funding remained near neutral and later turned negative, suggesting limited pressure from new leveraged long positions.
Beyond accumulation and leverage, on-chain data places recent buyers beneath price, while long-term holders provide the main supply zone above it. Bitcoin is now trading between these groups, creating a key market test for demand.
Several indicators point to a similar supply area overhead, including cost-basis levels, ask liquidity, options positioning and remaining liquidation clusters. A sustained move through that zone would show whether buyers can absorb the available supply.
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