Bitcoin surged 23% over the past week, its strongest one-week return since the post-election rally in November 2024, as a record short squeeze and shifting macro backdrop prompted analysts at K33 Research and Bitwise to compare conditions to previous bull market onsets.
Record short squeeze triggers leverage reset
A record $1.37 billion in bitcoin shorts were liquidated on Aug. 19, nearly double the previous daily high of $757 million from July 2021, followed by another $739 million on Aug. 21, according to K33 data.
The squeeze pushed notional perpetual futures open interest down to 284,000 BTC, its lowest since May, while funding rates returned to neutral.
Spot and perpetual futures volumes jumped 188%, while CME volumes rose 152%.
Bitcoin ETF products recorded net inflows of 31,740 BTC, their strongest week since the October 2025 highs.
Moving average reclamation mirrors past cycles
K33 Head of Research Vetle Lunde noted that bitcoin reclaimed its 50-day, 100-day, 200-day, and 200-week moving averages in just four days, faster than any prior cycle.
Lunde wrote in a report titled “Altitude sickness can wait”:
“The only previous occasions when it reclaimed all four within 45 days came in October 2015, April 2020, and October 2023, each around the beginning of a cyclical bull market.”
Bitcoin’s six-month 25-delta options skew also turned negative for the first time since September 2025, meaning calls became more expensive than puts after 11 consecutive months of traders paying a premium for downside protection.
Macro backdrop shifts toward scarce assets
Treasury Secretary Scott Bessent’s push to increase long-term bond buybacks helped spark demand for scarce assets, with reports emerging that the Treasury could use its nearly $1 trillion General Account to fund larger purchases.
Bitcoin’s 90-day correlation with gold climbed to 0.52, its highest since October 2020, while its Nasdaq correlation fell to 0.38, a one-year low.
Bitwise CIO Matt Hougan highlighted Bessent’s subsequent announcement of an “economic onslaught” against Iran’s global financial connections as a separate catalyst, writing in a client note:
“The more the global financial system becomes a tool of geopolitical power, the more valuable a neutral financial network becomes.”
