The cryptocurrency market has entered a powerful expansion phase as Bitcoin logged a 23 percent surge over the past week, marking its most robust weekly performance since the post-election rally of November 2024. The sharp upward movement catapulted the premier digital asset from roughly $63,000 to past the $80,000 mark by late Monday. In contrast to earlier bull phases, the current market dynamic has been strongly driven by forced deleveraging and an unprecedented short squeeze, alongside a resurgence in spot trading activity and institutional capital inflow.
Record Short Squeeze Wipes Out 1.37 Billion Dollars in Bearish Bets
A key catalyst behind this dramatic price appreciation was a massive unwinding of leveraged bearish positions across derivatives exchanges. Bearish traders faced historic liquidations as the market reversed aggressively. On August 19, Bitcoin recorded a massive single-day short liquidation event totaling $1.37 billion, easily eclipseing the previous record of $757 million set in July 2021. Throughout the week, the market registered both its largest and third-largest daily short liquidation events on record. Historically, major short squeezes of this magnitude occur during market bottoming phases when short positioning becomes overly crowded and selling pressure reaches exhaustion, turning shifts in tenor skew into reliable market reversal indicators.
Unprecedented Speed in Reclaiming Four Major Moving Averages
On the technical front, Bitcoin achieved a milestone by reclaiming its 200-week, 200-day, 100-day, and 50-day moving averages within a span of just four days. Historical data reveals that Bitcoin had never previously reclaimed all four key moving averages in such a compressed timeframe. Only three prior instances saw the asset recover all four levels within 45 days: October 2015, April 2020, and October 2023. Remarkably, each of those previous occurrences served as the precursor to a multi-month cyclical bull market. Analytical frameworks incorporating technical indicators, derivatives data, ETF flows, and macroeconomic conditions currently align with bear-market breakout patterns observed in 2019 and 2023.
Spot Volume Jumps 188 Percent alongside Strong ETP Inflows
The price rally has been well supported by underlying spot market participation. Average daily Bitcoin spot trading volume surged by 188 percent week-over-week to reach $4.7 billion, marking its highest level since early June following weeks of volume compression. Simultaneously, institutional sentiment showed a marked improvement through exchange-traded products (ETPs). ETPs recorded weekly net inflows of 31,740 BTC, representing the strongest weekly capital intake since October 2025. This boosted total BTC held by ETPs to 1.47 million BTC, though overall holdings remain 121,743 BTC below their historical peak due to heavy redemptions recorded between mid-May and June.
Overbought RSI Signals and Key Technical Levels
The intensity of the rally drove Bitcoin's daily Relative Strength Index (RSI) to a peak of 85.9 on August 21, prompting overbought observations among technical analysts. Current live indicators display an RSI of 82, confirming strong ongoing momentum. The Moving Average Convergence Divergence (MACD) sits at 3747.61 above the signal line of 2167.59, preserving a bullish histogram reading of 1580.02. Key support zones are established around the 20-day exponential moving average (EMA20) at $70,352 and the 200-day simple moving average (SMA200) at $69,127. Bitcoin trades within a 52-week boundary of $57,748 to $97,861, remaining approximately 36 percent below its all-time high. Immediate trading pivots around $78,689, with overhead resistance at $79,024 (R1) and downside support at $78,480 (S1).
Macro Impact and Altcoin Performance: XRP and POL Gain Ground
On the broader macroeconomic front, crypto markets responded positively to the US Treasury department's decision to double its debt buyback operations, triggering the 7th-largest liquidation event in market history and easing liquidity concerns. Major altcoins also reflected positive price action. Ripple (XRP) consolidated around $1.50 on Tuesday following a 72 percent weekly rally that tested $1.70 before pulling back due to profit-taking. Meanwhile, Polygon (POL) sustained its recovery above $0.1200 for a fifth consecutive session, holding onto 45 percent gains from the previous week as transaction activity and economic value on the Polygon network continued to expand.
