Bitcoin fell below $78,000 after its breakout above $81,000 reversed, triggering a wave of long liquidations as traders took profits and bullish leverage unwound. Strong US spot ETF inflows, however, suggest underlying demand has not disappeared.
Summary
- Bitcoin dropped 4.1% from $81,238 to $77,870 before recovering toward $78,000.
- Long positions accounted for about $270 million of the market’s $324.4 million liquidations.
- Bitcoin futures open interest fell 4.5% from its level near the recent price peak.
- US spot Bitcoin ETFs drew $2.57 billion across seven consecutive inflow sessions.
Bitcoin price retreats after $81K breakout
Bitcoin’s pullback followed a round of profit-taking and an increase in leveraged long positions after last week’s short squeeze pushed the asset above $80,000.
Bitcoin (BTC) reached $81,238 on Tuesday after breaking out of a consolidation range that had held for about 10 weeks. The move placed the cryptocurrency roughly 29.5% above its range low before sellers returned near the May high.
Price subsequently fell to $77,870, marking a decline of about 4.1% from the peak. Bitcoin then recovered toward $78,000, placing it near the lower boundary of a short-term range identified by Bitfinex analysts.
The reversal did not follow a confirmed news catalyst. Instead, liquidation and open-interest data point to a derivatives reset after traders increased bullish exposure during the breakout.
CoinGlass data showed that the wider crypto market recorded $324.4 million in liquidations over 24 hours. Long positions accounted for approximately $270 million, or 83% of the total.
Bitcoin longs contributed about $109 million to those losses. The largest single liquidation involved an $11.91 million Bitcoin position on Binance.
Falling open interest signals leveraged longs exited
Bitcoin futures open interest declined to $54.79 billion, down 1.5% from $55.64 billion at the previous reading. Open interest has now fallen about 4.5% from the $57.38 billion recorded near Bitcoin’s $81,238 peak.
The combination of falling prices and lower open interest supports the view that leveraged long positions were closed or liquidated rather than replaced by an aggressive buildup of new short exposure.
CoinGlass recorded $68.81 billion in Bitcoin futures volume and $4.94 billion in spot volume. Funding rates were positive across several exchanges before the decline, showing that derivatives positioning had shifted toward bullish traders.
Jeff Ko, chief analyst at CoinEx, told crypto.news that the initial short squeeze had largely run its course, leaving spot buyers responsible for extending the rally.
“First, as above, the short squeeze is spent, so spot demand now has to lead rather than follow leverage,” Ko said.
Ko added that open interest and funding rates still appeared restrained to him despite the recent volatility. Continued restraint would reduce the risk of another large liquidation-driven reversal, although both measures will need monitoring if Bitcoin attempts to recover above $80,000.
US Bitcoin ETF inflows support the spot-demand case
US spot Bitcoin ETFs recorded $314.3 million in net inflows on Aug. 25, according to data from SoSoValue. BlackRock’s IBIT led the session with $284.4 million.
Seven consecutive positive trading sessions brought cumulative inflows to approximately $2.57 billion. Bitfinex said the flow represented firm spot demand rather than a rally sustained mainly by speculative leverage.
Ko separately estimated that the funds attracted roughly $1.9 billion during the week, describing it as the strongest weekly inflow of 2026.
“The question I care about most is whether this transitions from a derivatives-driven rally into a spot-driven one, and there are constructive signs,” Ko said.
Bitfinex also reported that 19 of the 20 largest liquid altcoins gained more than 12% during the broader market advance. Zcash rose 50.9%, Aave gained 44.7%, XRP climbed 43.3%, and Hyperliquid’s HYPE advanced 36.2% to a record high.
Aggregate altcoin market capitalization excluding Bitcoin and Ethereum rose 21% to $791.5 billion, according to the firm. Bitfinex added that holders who acquired Bitcoin 155 to 300 days earlier had moved from realizing losses to selling at a profit, creating overhead supply for ETF and other spot buyers to absorb.
Bitcoin must reclaim $80K to repair the breakout
Bitfinex analysts expect Bitcoin could consolidate between $77,100 and $80,000 before determining its next direction.
“We now have a squeeze that has run into a defined population of sellers but with a genuine bid underneath it,” the analysts told crypto.news.
“This leads us to believe that a potential lower timeframe range, or a continuation of the move is likely.”
The immediate support zone sits between $77,800 and $78,000, where buyers responded during the latest decline. A sustained break below that area could expose $76,500 to $77,000, followed by $75,700 to $76,000.
Bitcoin’s broader recovery would face a more serious test if BTC price falls below $72,500 to $73,000. Ko identified the 200-day moving average around $69,000 to $70,000 as the main medium-term support after Bitcoin moved above it for the first time since November 2025.
On the upside, Bitcoin must reclaim the $79,200 to $80,000 region to weaken the failed-break structure. A close above $81,100 to $81,250 would provide stronger confirmation that buyers have regained control.
Ko identified May’s high near $82,000 as the next difficult barrier. He said sustained ETF demand could support a move toward $85,000 to $90,000 because the source of demand will determine whether the advance holds.
Policy and bond yields remain risks for Bitcoin
US policy and Treasury-market conditions could influence whether institutional demand persists. Ko described the Sept. 15 CLARITY Act vote as an active risk for Bitcoin rather than merely a potential positive catalyst.
He also noted that the 30-year Treasury yield had returned to 5.27% after reversing an earlier decline. Higher long-term yields can tighten financial conditions and reduce demand for risk assets, including cryptocurrencies.
Bitcoin’s next move, therefore, depends on whether ETF and other spot demand can absorb profit-taking without another increase in leverage. Continued inflows could support a renewed attempt at $81,000, while a loss of $77,100 would shift attention toward lower support and the strength of US institutional flows.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
