Bitcoin’s August rebound lost momentum just below $80,000 on Aug. 27, leaving the market caught between a nearby wall of long-term holder supply and a much lower pocket of leveraged long positions that could amplify any deeper decline. The move began as a short squeeze but faded as fresh selling emerged, sending Bitcoin back toward $76,000.
The market has yet to test either of its largest liquidation zones. A dense concentration of short positions sits between $83,000 and $86,000, while a separate cluster of long-liquidation risk remains around $60,000 to $63,000. Those levels place Bitcoin in a broad but increasingly defined range after a summer marked by accumulation near the lows and distribution near the highs.
Bitcoin’s failure to extend the squeeze toward $83,000 suggests that spot demand has not yet been strong enough to absorb supply from holders willing to sell into a recovery. The $83,000-$86,000 area also overlaps with concentrated long-term holder supply, giving the upper boundary more weight than a typical derivatives-driven resistance level.
More Bitcoin is profitable at the same price
On-chain profitability has increased since Bitcoin last traded around current levels. When the asset was near $78,000 in May, about 65% of circulating supply was in profit. By late August, the share had risen to 68% despite Bitcoin returning to a similar price range.
That change points to a redistribution of coins during the summer downturn and recovery. Short-term holder cost basis reset to roughly $71,000, meaning many buyers who accumulated during the pullback were sitting on gains as Bitcoin approached $80,000.
A larger profitable supply can make rallies harder to sustain near prior highs. Holders who bought during the summer have more room to realize gains, particularly if Bitcoin revisits levels where previous recoveries stalled. The pattern places the $83,000-$86,000 band at the center of the market’s next test: a clean move through it could force short covering, while another rejection would leave recent buyers exposed to a retreat toward the summer base.
The lower end of the range is supported by a concentration of accumulated supply between $62,000 and $65,000. That area sits just above the $60,000-$63,000 long-liquidation zone, creating a potentially unstable setup if selling pushes Bitcoin below its summer accumulation floor. A break through that region could trigger forced closures of leveraged positions before longer-term buyers have an opportunity to respond.
ETF demand rose, but trading activity stayed restrained
Spot Bitcoin exchange-traded funds recorded their strongest seven-day average net inflow during the rebound, at $290 million per day. The flows showed that regulated investment products continued to attract capital while Bitcoin recovered from its summer lows.
Secondary-market activity was less forceful. Daily trading volume remained near $3 billion, according to the market data cited in the analysis. Lighter trading can make price moves more sensitive to concentrated buying or selling, especially near liquidation clusters where derivatives positioning can accelerate short-term swings.
The gap between ETF inflows and softer secondary-market turnover complicates the picture. ETF demand can remove available supply over time, but thin trading conditions do not necessarily provide enough immediate depth to carry Bitcoin through heavy sell orders near resistance. That helps explain why the August squeeze could lift prices quickly but struggled to hold gains above $79,000.
Treasury yields add pressure to risk assets
Bitcoin’s recovery also unfolded against rising U.S. Treasury yields. The 10-year Treasury yield climbed from roughly 4.6% to 4.8% over eight trading days, reaching 4.79% and setting a new high for the current cycle in the analysis.
Higher government bond yields raise the return available from lower-risk assets and can tighten financial conditions across markets. The move reversed an earlier decline tied to headlines about U.S. Treasury buybacks, reducing one source of support for risk-sensitive assets.
Bitcoin’s 30-day rolling correlation with the S&P 500 fell toward zero during the rebound, while equities largely moved sideways. The weaker correlation means Bitcoin did not simply follow the equity market higher or lower during that period. It also leaves the asset more dependent on its own supply dynamics, ETF flows, derivatives positioning and crypto-specific liquidity.
Inflation and monetary-policy expectations remain part of that backdrop. The supplied analysis cited July Consumer Price Index inflation of 3.4% and said futures markets priced a 66% probability of a 25-basis-point Federal Reserve rate increase on Sept. 16. Federal Reserve Chair Kevin Warsh and New York Federal Reserve President John Williams were described as maintaining a hawkish policy tone, with Williams questioning whether a 3.50%-3.75% policy range would sufficiently cool economic activity.
September options expiry concentrates attention above $80,000
Options markets point to Sept. 25 as the next major calendar event. Combined open interest at the quarter-end expiry stood near $14 billion, with a large concentration of positions struck above $80,000.
The structure creates a focal point near Bitcoin’s upper range boundary rather than a clear directional signal. Options open interest alone does not guarantee that prices will move toward the most popular strikes, but hedging activity can increase sensitivity as expiry approaches, particularly if spot returns to the $80,000-$86,000 area.
Short-dated options positioning had already cooled after the August squeeze. The seven-day 25-delta skew, a measure comparing demand for upside calls and downside puts, jumped during the rally before quickly returning toward neutral. The 180-day skew remained broadly steady, suggesting the sudden burst of near-term bullish positioning did not materially alter longer-dated expectations.
Bitcoin now faces a market structure in which upside momentum must clear substantial holder supply before it can reach the short-liquidation zone above $83,000. Below spot, the summer accumulation base offers support, but a breach would place heavily leveraged longs closer to forced liquidation. With Treasury yields elevated and the Sept. 25 options expiry approaching, liquidity around those boundaries is likely to matter more than broad directional narratives.
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