Bitcoin jumps 23% to $79,000 as leverage unwind drives rally

Bitcoin rose 23% to $79,000 in three sessions as short liquidations and ETF inflows replaced leverage as the primary driver.

"These short, impulsive moves are adding to the volatility that has been building again in the crypto market recently," Darkfost, an analyst at CryptoQuant, said, noting that all 17,800 BTC sent to Binance came from holders who bought less than 24 hours prior.

Nearly $3 billion in short positions were liquidated over 24 hours as BTC crossed $71,000, according to data cited by cryptocurrency advocate Scott Melker. Spot Bitcoin ETFs recorded $517.19 million in net inflows on Aug. 19 and $606.3 million by Aug. 20, the strongest showing in nearly three and a half months. Dollar-denominated open interest rose 11.7% to $25 billion, but BTC-denominated OI fell 8.7% from 366,000 to 334,000 BTC.

The question now is whether BTC can hold above the low-$70,000s after such a rapid move. Michaël van de Poppe identified $73,500-$75,000 as the "first real test," with failure to hold recent gains potentially inviting profit-taking after one of Bitcoin's strongest rallies in months.

The rally's foundation was set by the U.S. Treasury's decision to at least double buybacks of government securities maturing between 10 and 30 years, increasing individual operations from $2 billion to $4 billion beginning in September. Long-term yields initially dropped and the dollar weakened, pushing traders into assets like Bitcoin and gold. President Donald Trump's renewed pressure on Congress to advance the CLARITY Act added a regulatory tailwind.

Open Interest Falls 8.7% in BTC Terms as Price Rises

On-chain data shows the move was structurally different from prior pumps. CryptoQuant's Axel Adler Jr. noted that the Coinbase Premium Index, which compares BTC prices on Coinbase with those on Binance, remained negative at -0.046 throughout the advance, improving from -0.11 but never crossing into positive territory. This suggests U.S. spot demand participated but was not the primary driver.

More than 38,000 BTC flowed into accumulation addresses with an estimated cost basis near $70,000 earlier this month, according to Coinpaper's analysis. With Bitcoin now above that level, a large portion of those recent buyers has moved back into profit.

The broader market followed. Ethereum topped $2,360, while XRP and Dogecoin posted strong gains. Global crypto market capitalization stood at $2.49 trillion, up 5.42% in 24 hours, with trading volume jumping 18%. The Crypto Fear & Greed Index shifted into "greed" territory.

Strategy, the largest corporate Bitcoin holder, saw its 840,447 BTC position return to profitability at an average cost of $75,385 per coin, with unrealized gains of approximately $1.69 billion after months of deep losses.

The divergence between dollar-denominated and BTC-denominated open interest is the key signal. Price rising faster than new positions are being built suggests traders are closing existing positions rather than adding fresh leverage — a constructive dynamic for market structure, but one that raises questions about whether the rally can sustain without new speculative capital.

This article is for informational purposes only and does not constitute investment advice.