Bitcoin Breaks $80,000: Short Squeeze Sets the Stage — Is the Bull Run Here?

After a rapid run-up, Bitcoin has entered a more critical verification phase.

As of Beijing time on August 25, Bitcoin's price had reclaimed the $80,000 level. It rose more than 20% over the past week — the second-largest weekly gain since early 2021. The price reversed sharply, broke out of its prior range, and held the highs; those moves carry some early-bull-market characteristics.

The gap between a fast rally and a confirmed bull market is still meaningful. The first half of this leg was driven by large-scale short liquidations; from here on, the trend-deciding force shifts from derivatives back to spot. Whether ETFs can keep attracting flows and whether US direct-buying demand can recover will determine whether Bitcoin forms a new high platform or gives back gains once the squeeze runs out of fuel.

The Squeeze Lifts Price; Spot Starts to Take Over

The defining feature of this leg is the speed of the rally.

Bitcoin had been ranging near $60,000–$65,000 for some time, with many investors shorting via futures and perpetual contracts on the view that prices would fall further. When Bitcoin broke upward, shorts had to buy back contracts to close their positions — and once losses exceeded their margin capacity, exchanges force-bought them out. Mass simultaneous buybacks pushed price higher, triggering the next wave of forced closures, in a loop of "up, cover, up again."

CoinGlass data shows that in the four hours after the move accelerated, roughly $1.4 billion of short positions were liquidated across crypto markets; that figure topped $4 billion over the following two days. The squeeze explains how Bitcoin sliced through multiple price zones so quickly, but this kind of forced buying fades as short books run out.

"Short-term, you still need to separate the 'squeeze' from a 'trend confirmation,'" Sinofire Research told Barron's Chinese edition. Bitcoin's recent move from the lows was partly powered by shorts being forced out and covering, which is why both the magnitude and the speed are large; that alone is not enough to conclude that long-term spot buying has fully returned.

Whether the move can sustain itself depends on whether active buyers take the baton. The data so far shows spot demand improving. Last week, US spot Bitcoin ETFs posted net inflows on five straight sessions, totaling about $1.92 billion — the largest weekly inflow since October 2025. Preliminary data from Farside Investors shows those ETFs took in another $129 million on August 24, with the inflow streak extending into the new week.

This is also the key reason Bitcoin has held the $77,000–$80,000 zone even after the mass short liquidations ended. "The next step for the market isn't just whether price keeps rising," Sinofire Research said, "but whether spot buying can replace short-covering as the main force driving the move."

Spot demand, however, has not been fully confirmed. CryptoQuant data shows that as of mid-August, the Coinbase Bitcoin Premium Index had been negative for over 100 consecutive days. The index measures the price gap between US Coinbase and international venues. A persistently negative reading means direct buying demand on US venues is still relatively weak.

Citi's latest report likewise points to ETF flows as the most important driver of Bitcoin's price. In July, Citi cut its 12-month Bitcoin target from $112,000 to $82,000, citing softer ETF demand and stalled regulatory progress. Both variables have improved recently, but a single week's inflows aren't enough to prove that long-term allocation has restarted.

Regulatory Expectations Improve; Macro Pressure Has Not Gone Away

Improving regulatory expectations are another pillar supporting the move.

The SEC has proposed a new crypto-asset financing framework: a $5 million fundraising exemption for early-stage projects, an annual aggregate exemption of up to $75 million, and a conditional "investment contract" safe harbor. The comment period runs through October 20.

The CFTC held the inaugural meeting of its Innovation Advisory Committee on August 20, discussing the evolution of crypto regulation, AI, and prediction markets. Rather than relying primarily on enforcement to define boundaries, regulators are trying to build a clearer rule system.

The more important policy date is September 15. On that day the US Senate will hold a key procedural vote on the Digital Asset Market Clarity Act. The bill attempts to delineate the responsibilities of the SEC and the CFTC and to clarify which digital assets fall under securities versus commodities regulation.

Clearer rules would help improve policy expectations for compliance-oriented institutions participating in crypto. For now, however, the SEC rule is still a proposal and the Clarity Act has not reached a final vote. The market is trading a falling regulatory discount — not yet a landed legal framework.

The macro backdrop is more complex. Shipping through the Strait of Hormuz continues to face disruption, with oil prices and inflation expectations running elevated. Stacked on top of that, the US fiscal deficit is widening and long-dated Treasury supply is increasing — the 30-year Treasury yield briefly touched 5.337%, the highest since 2007.

The US Treasury then announced that, starting September 9, it will raise the per-operation liquidity support repurchase cap on 10- to 30-year Treasuries from $2 billion to at least $4 billion, briefly pulling long-end yields back down. Repurchase operations can improve trading liquidity, but they don't change the structural pressure from the fiscal deficit and Treasury supply. If long-end rates rise again, they could still weigh on high-beta assets like Bitcoin.

On the medium-term drivers, Sinofire Research sees three forces that could push the market: reallocation demand from crowded AI-investment themes, capital from compliance-oriented institutions as the regulatory picture clarifies, and cross-asset trading links from the tokenization of traditional financial assets.

The Next Month Will Define the Nature of the Move

In the short term, Bitcoin is already in an overbought zone. The 14-day RSI on multiple venues sits around 78–82, all above the conventional overbought line.

Sinofire Research sees $78,500–$82,000 as the near-term resistance zone and $72,400–$73,500 as the support zone below. Compared with price-target calls, how capital behaves on a pullback is more informative. If Bitcoin pulls back but holds above the prior breakout zone and ETFs keep taking inflows, that would mean spot capital is absorbing profit-taking. If price weakness comes with ETF redemptions and a widening Coinbase discount, the squeeze component in this leg likely outweighs genuine long-term allocation demand.

Lacie Zhang, head of research at Bitget Wallet, sees the following: if Bitcoin can close above $80,000 and turn that level into support, $85,000–$90,000 becomes a realistic zone to watch over the coming weeks; if ETF inflows stay strong and macro liquidity continues to improve, price could also move faster toward $95,000–$100,000.

That said, after a 20%+ weekly rally the market is clearly overheated. If perpetual funding rates climb rapidly, ETF inflows slow, or Bitcoin breaks out but fails to hold $80,000, the market may first consolidate and rebuild before attempting the next leg up.

The next month will bring a dense cluster of macro and policy tests. US July PCE data is due August 26; the Jackson Hole central bankers' symposium runs August 27–29; the August non-farm payrolls report is due September 4. The US Treasury's expanded long-end repurchase program kicks off September 9. September 15 brings the Clarity Act procedural vote, and the FOMC meets September 15–16.

These events will jointly shape the dollar, long-end rates, and risk appetite. If ETF flows continue, the regulatory process advances, and Bitcoin holds its key supports on pullbacks, the current high consolidation could become the start of a new cycle. If spot demand weakens — combined with rising inflation and a re-rising long end — the area near $80,000 could also become a zone of concentrated short-term profit-taking.