Bitcoin closed August with a 24% gain, marking its best monthly performance since the 2017 cycle, according to CoinGlass data. The rally triggered significant liquidations across derivatives markets, with $6.55 billion in short positions and $3.16 billion in long positions liquidated over the previous two weeks.
Shorts accounted for roughly two-thirds of total liquidations, indicating that bearish traders were heavily squeezed as Bitcoin prices rose. Funding rates on Binance increased more than 42% in less than a week, suggesting market participants positioned bullishly, though Bitcoin consolidated below the $80,000 level.
Spot Demand Concerns Mount
Despite derivative market activity, on-chain metrics suggest underlying demand may be weakening. Bitcoin ETFs recorded over $201 million in net outflows on August 28, ending a nine-day inflow streak, according to SoSoValue data.
Smaller holders, particularly wallets holding less than 100 BTC, accumulated heavily during dips below $67,000. However, short-term holders represent a potential pressure point, as they typically sell during risk-off periods or when key resistance levels fail to break.
Technical Setup Under Pressure
Analysts note that ETH/BTC is positioned at a key breakout level. If Ethereum outperforms Bitcoin while spot demand weakens and short-term holder supply rises, it could signal capital rotation away from Bitcoin, adding headwinds to September momentum.
The majority of August's $9.71 billion in total liquidations came from short positions rather than new spot buying, raising the possibility that the rally was driven primarily by forced short covering rather than fresh demand. If this dynamic persists, Bitcoin's August gains may not sustain into the following month.
